Which of the Following Is TRUE of Changes in Cash

question 109

Multiple Choice

Which of the following is TRUE of changes in cash discount period?

• A)If a firm increases its cash discount period,the sales are expected to decrease,the bad debts are expected to decrease,and the profit per unit is expected to increase.
• B)If a firm decreases its cash discount period,the sales are expected to decrease,the bad debts are expected to decrease,and the profit per unit is expected to increase.
• C)If a firm increases its cash discount period,the sales are expected to increase,the bad debts are expected to decrease,and the profit per unit is expected to decrease.
• D)If a firm decreases its cash discount period,the sales are expected to decrease,the bad debts are expected to increase,and the profit per unit is expected to decrease.

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Definitions:

Default

The failure to fulfill an obligation, especially failing to pay back a loan on time.

Surety

is a person or entity that takes responsibility for another's performance, such as fulfilling the terms of a contract or repaying a loan.

Default

Failure to fulfill a legal obligation or agreement, such as not making a payment on a loan by the due date.

Obligation

A duty or commitment to fulfill a contractual, legal, or moral requirement.