Charging interest on past due customer accounts reflects that:
A)credit sales cost more to manage than they are worth.
B)credit customers receive preferential treatment.
C)money has a time value.
D)government regulations protect customers who are late in making payments.

Question

Quizplus · Accepted Answer

Charging interest on past due customer accounts reflects that money has a time value. This means that the value of money today is worth more than the same amount of money in the future. Therefore, charging interest compensates the seller for the time value of money and the cost of managing credit accounts. It is not about giving preferential treatment to credit customers or government regulations.

Charging Interest on Past Due Customer Accounts Reflects That