The potential disadvantages of extending credit include all of the following except:
A)increased bad debt costs.
B)customers buying too much.
C)the need to hire employees to undertake collection efforts.
D)higher wage costs in the accounting department.

Question

Quizplus · Accepted Answer

The disadvantages of selling on credit are increased wage costs,bad debt costs,and delayed receipt of cash.If credit is extended,the company will have to hire people to evaluate whether each customer is creditworthy,track how much each customer owes,and follow up to collect the receivable from each customer.Some of these costs will be incurred in the accounting department.The fact that customers might buy too much is certainly not a concern related to extending credit.

The Potential Disadvantages of Extending Credit Include All of the Following