The Percentage-Of-Sales Procedure Arises from the Idea That Uncollectible Amounts

question 93

True/False

The percentage-of-sales procedure arises from the idea that uncollectible amounts will vary with the volume of credit business.The firm estimates the appropriate percentage by studying its own experience or by inquiring into the experience of similar firms.Default rates generally fall within the range of .01% to .02% of credit sales.

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Definitions:

Resale

The act of selling a product or service again, often used goods, to another buyer.

Perfectly Price Discriminate

A pricing strategy where a seller charges the maximum possible price for each unit consumed that each buyer is willing to pay, thus capturing the entire consumer surplus.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay.

Federal Trade Commission

The Federal Trade Commission is a United States federal agency established to protect consumers and promote competition by preventing anticompetitive, deceptive, and unfair business practices.