Charging Interest on Past Due Customer Accounts Reflects That

question 24

Multiple Choice

Charging interest on past due customer accounts reflects that:

• A)credit sales cost more to manage than they are worth.
• B)credit customers receive preferential treatment.
• C)money has a time value.
• D)government regulations protect customers who are late in making payments.

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Definitions:

Variable Expenses

Costs that change in relation to the business’s activity level or volume, similar to variable costs.

Fixed Expenses

Costs that do not vary with the level of production or sales within a certain range.

Special Order

An order for goods or services that is outside the company's normal scope of work, which can often require a unique pricing strategy and cost analysis.

Variable Expenses

Costs that fluctuate with business activity levels, such as raw material costs or utilities following production volumes.