Which of the following situation refers to the cost effects in changing credit policy? Multiple Choice When the firm offers a cash discount as part of its credit terms, some customers choose to pay early to take advantage of the discount. When the firm grants credit, it must arrange to finance the resulting receivables. If the firm grants credit, some percentage of the credit buyers do not pay. Although the firm may experience delayed revenues if it grants credit, it still incurs the costs of sales immediately. When the firm grants credit, there is a delay in revenue collections as some customers take advantage of the credit offered and pay later.

Q: In your own words, explain the advantages and disadvantages of credit.

A: Credit involves making the purchase of goods or availing services and paying for the transaction in…

Q: Why does Sales discounts are variable consideration?

A: Variable considerations: Variable consideration refers to the amount that the corporation is…

Q: LC8Q3.Which of the following is a variable cost? Loan interest rate Salary Rent Salesperson s…

A: A variable cost is a type of cost which changes in accordance to the change in the level of output.

Q: List and explain the differences between a self managed credit plan and a contracted credit plan.

A: A credit is a type of loan taken by individuals or corporations in which the borrowers borrow an…

Q: How does the lower of cost or market relate to profit margins?

A: Answer: The lower cost or market implies that, depending on how historical costs and market costs…

Q: Why is it important to set a credit limit?

A: Solution:- Given, Credit Limit :- The term credit limit refers to the maximum amount of credit a…

Q: What costs are associated with not granting credit?

A: Cost Management -The preparation and supervision of a company's budget is known as cost management.…

Q: The cost of marginal bad debts is found by taking the difference between the levels of bad debts…

A: Bad debt refers to the loans or amount that can no longer be recovered as the person has lost all…

Q: What are the differences between market ordersand limit orders?

A: Market orders might not be executed external of market times or if trading in a specific stock is…

Q: What is the difference between a credit sale (with a higher price as compared to the cash sale) and…

A: The amount of Sales made in credit has to be collected after certain period of time. In case of cash…

Q: How the system of cost accounting has overcome the limitations of financial accounting. Explain it…

A: Cost Accounting -: Cost accounting is a procedure of administrative accounting that aims to…

Q: Why might purchasing power parity fail to hold?

A: It refers to the relationship which indicates the same cost and same kinds of products in the market…

Q: What effect do minor deviations from the EOQ have on totalinventory cost?

A: Minor variations from the EOQ will not in general highly affect the total inventory cost except if…

Q: Why do you think factoring commission is collected upfront ?

A: By factoring, a company can obtain the short-term cash it needs by selling its accounts receivable…

Q: In your own words explain the meaning of: a. differential revenue, b. differential cost, and c.…

A: In accounting, Differential means the difference between the two alternatives or two output levels,…

Q: Define increase or decrease of credits.

A: Definition:   Account: Account is the basic record that reports all changes in the value of…

Q: D6) Finance What are the costs of extending trade credit? (Be specific please)

A: Trade credit is the credit or kind o loan given to the customers of the business for delaying the…

Q: what basic criteria are commonly used in evaluating credit risk?

A: Credit risk is the risk of facing a loss due to a counterpart's failure to repay the debt in part or…

Q: Describe some ways to manage credit risk at a nonfinancialcompany

A: Evaluation of the customer prior to granting credit. Nonfinancial Company does self-evaluation or…

Q: What is the economic rationale for the cost approach? Under what conditions would the cost approach…

A: Answer: Economic rationale for cost approach: The cost approach means that the person who is…

Q: Which of the following statements about the financial risk to providers under different…

A: Risk is the most under capitation.Here's why the reason is:This is accurate that, regardless of…

Q: Which of the following should be avoided in a contract if cost certainty is important?…

A: Several options have been proposed as the clause that should be avoided in a contract if cost…

Q: A ______________ factor of credit policy effects occurs when a firm which institutes a credit policy…

A: There are different variables related to the credit policy of a company. These variables are -…

Q: In addition to creditworthiness, on what intangible factors does unsecured lending depend?

A: Unsecured lending is that type of lending in which there is no requirement of any collateral.   For…

Q: Describe the incremental analysis approach for evaluating aproposed credit policy change.

A: Appropriate income statements can be contrasted to assess the difference in credit policy. This can…

Q: Describe the trade-offs of extending credit.

A: Accounts receivable: Accounts receivable refers to the amounts to be received within a short period…

Q: Compare and contrast the historical cost accounting model with the fair value accounting model. What…

A: The cost accounting model is a method of accounting that focuses on the measurement, analysis, and…

Q: Which different terms are used to refer to rate of return?

A: Rate of return is the return that is expected by the investors from the investment made. It is…

Q: How do you think participations affect the riskiness of a loan?

A: It's a credit that involves the lender in the net income. The interest rate is lowered to take part…

Q: 16. What do you call for the likelihood of loss due to customers are not paying their amounts owing?…

A: In order to answer this question first we can explain all the risk mentioned in the options.…

Q: What are the main differences between ARMs and FRMs loans? You need to highlight the differences in…

A: Loan which are provides to the borrower either in Adjusted Rate of Mortgage or Fixed Rate of…

Q: How does the cost of costly trade credit generally compare withthe cost of short-term bank loans?

A: Costly trade credit imply companies that make payments after the discount period as they forego the…

Q: Why might the market value of a loan differ from its outstanding balance?

A: Loan outstanding balance: The outstanding balance or loan balance is the remaining amount that is…

Q: Which form of receivables financing is least complex?

A: factoring  is a form of receivables and debtor finance

Q: em. b. the amount of money paid for an item,

A: Opportunity costs are the potential gains that an individual, investor, or corporation foregoes by…

Q: What are the essential differences among demand deposits, savings deposits, and time deposits?

A: Deposits refers to the sum of money that are deposited with banks or any financial institution.…

Q: With example, explain the difference between induced and indirect economic impact.

A: Answer:- Economic impact definition:- An economic impact study investigates the effects of a certain…

Q: Differences and similarities of Business and Consumer Loan.

A: A loan is a financial term that indicates the borrowings of an individual or an organization. In…

Q: The Migration Analysis Method

A: The Migration Analysis Method is a credit risk management technique that can be used by financial…