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: What is capital rationing?

A:

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: Examples of a market order, limit order and a stop loss?

A: To buy or sell Common stock or shares of a firm, you can place different types of buy/sell orders…

Q: What are the Uneven-Payment Series?

A: What are the Uneven-Payment Series.

Q: How can we find the present worth of any uneven stream of payments?

A: The question is based on the concept of present value of uneven cash flow

Q: explain how sunk costs create a barrier to entry into the market place.

A: Sunk costs are expenses that can not be retrieved if a corporation wishes to leave a market.

Q: When are credits increases? When are credits decreases?

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: 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: State the difference between secondary market and primary market.

A: Financial Markets refer to the place where financial assets or securities are being created,…

Q: What do we mean by a uniform series payment?

A: Under uniform series of payment, payment of same amount is made or received at a regular time…

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: he profit and loss account's negative balance should b

A: One of a firm's business accounts, an income statement, also known as a profit and loss account,…

Q: What if the lessee is unaware of the lessor’s implicit rate?

A: Lease:   Lease is a contractual agreement whereby the right to use an asset for a particular period…

Q: What is the principal objection to the payback method?

A: The Payback period is one of the traditional or non-discounting techniques of Capital budgeting. It…

Q: Explain Payment Caps and Negative Amortization?

A: Payment Caps: A payment cap is a customer protection that bounds the amount that your monthly…

Q: What is issue of payments deficits

A: Introduction:- payment of deficit means:- Country imports more goods, services, and capital than…

Q: Does leasing lead to increased credit availability?

A: Answer: Leasing is a mechanism by which the company may receive such capital assets for use, through…

Q: receivables turnover ratio

A: Receivable turnover ratio is an important accounting metric used to evaluate the performance of…

Q: What is the major advantage of using a fee-only financialplanner?

A: There are different types of financial planners to help investors plan their finances. Majorly,…

Q: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: How does accounting for permanent differences less complex than is accounting for temporary…

A: Temporary Difference:   A temporary difference is the difference of an income recognized under the…

Q: What will be the Effect of the After-Tax Interest Cost on Loan Decisions?

A: Interest cost for loan borrowers depends mainly upon the rate of interest charged by lenders.…

Q: Explain mezzanine loan?

A: Mezzanine financing is a blend of both debt and equity financing. It is a way for firms to raise…

Q: What are opportunity costs? Explain why opportunity costs are not recorded in financial accounting…

A: The advantage that was forfeited by not selecting an option is known as the opportunity cost. The…

Q: What is the difference between the methods of calculating cost of goods, periodic vs perpetual?

A: Inventory: Inventory refers to the goods purchased or material purchased and manufactured which is…

Q: What is purchasing power parity? Why might purchasing power parity fail to hold?

A: To measure the prices of goods in different countries purchasing parity is used. As per the…

Q: What are some criticisms of the payback method?

A: Payback Period: Payback period is the period in which the project recovers its initial cost of the…

Q: What is noncommited and committed line of credit?

A:

Q: Define the term Uneven-Payment Series?

A: Payment series: It can be defined as the sequential payments being made to another party over a…

Q: Why Pay back period method is not as effective as NPV?

A: Payback method  It doesn't consider account inflation as well as the cost of capital. It ignores…