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What is the effect of extending the collection period for accounts receivable? The collection cost will be reduced. Cash flows from operations may be higher than expected for the company’s sales. The company should expand operations with its excess cash. Bad debt expense will generally be higher.

What is the effect of extending the collection period for accounts receivable? The collection cost will be reduced. Cash flows from operations may be higher than expected for the company’s sales. The company should expand operations with its excess cash. Bad debt expense will generally be higher.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the effect of extending the collection period for accounts receivable?

The collection cost will be reduced.

Cash flows from operations may be higher than expected for the company’s sales.

The company should expand operations with its excess cash.

Bad debt expense will generally be higher.

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By extending the collection period, Debtors will be encouraged to purchase more and may eventually result in increase in company's expected sales.

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