Firms Extending Credit to Customers Should

question 35

Multiple Choice

Firms extending credit to customers should

• A)strive for zero uncollectible accounts to eliminate the need for establishing a bad debt expense and maintaining an allowance for uncollectible accounts.
• B)grant credit indiscriminately otherwise the firm may be charged with discrimination in the granting of credit and could be found to be in violation of Federal laws.
• C)grant credit to a given group of customers whenever the amount collected from the credit sales to that group exceeds the cost of goods sold and the other costs of serving that group.
• D)should ignore collection efforts aimed at those customers who have not paid their bills because the cost of staffing and maintaining a collection department are never cost effective.
• E)none of the above.

---

Definitions:

Sensory Adaptation

The process by which sensory receptors become less responsive to constant stimuli over time.

Absolute Threshold

The minimum intensity of stimulation that must occur before you experience a sensation.

Detection Threshold

The minimum level of intensity at which a stimulus is perceived or detected by the sensory system.

Just Noticeable Threshold

The minimum difference in stimulation that a person can detect 50% of the time; also known as the difference threshold.