Which of the Following Actions Would NOT Be Considered Good

question 19

Multiple Choice

Which of the following actions would NOT be considered good management of accounts receivable?

• A) assessing creditworthiness of new or potential customers
• B) very loose or flexible credit terms to encourage sales
• C) offering discounts to encourage faster payment
• D) regular aged receivables analysis

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Definitions:

Active Income/Loss

Income or losses generated from direct business activities or employment, as opposed to passive income from investments.

Passive Income/Loss

Earnings from rental property, limited partnerships, or other enterprises in which the individual is not actively involved.

Passive Activity Loss Rules

Regulations that limit the amount of losses taxpayers can deduct from passive activities, such as rental properties, against other income.

At-Risk Rules

Tax regulations limiting the amount of deductible losses from certain types of investments to the amount actually at risk.