Which of the Following Is an Advantage of Providing Credit

question 66

Multiple Choice

Which of the following is an advantage of providing credit to customers?

• A) It reduces the need to borrow money.
• B) It speeds up the receipt of cash.
• C) It reduces the cost of selling.
• D) It ensures all customers make on-time payments.

Learn how the firm's financial policies affect the components of working capital such as accounts receivable, inventory, and accounts payable.

Understand the factors that influence the cash cycle and how changes in policies can impact firm profitability.

Recognize the trade-offs involved in short-term financial decision-making, including the balance between carrying costs and shortage costs.

Assess the implications of changes in short-term financial policies on a company's risk profile and liquidity.

---

Definitions:

Barter

Trading goods and services directly without involving money as an intermediary.

Barter System

An ancient method of exchange where goods and services are directly traded for other goods and services without using money.

Good

A material item that can be touched, used, or consumed, which is produced to fulfill wants or needs.

Service

A type of economic activity that is intangible, is not stored, and does not result in ownership; services are produced and consumed at the same time.