Credit should be granted to customers in which circumstance?
A) if sales can be increased
B) if bad debts can be minimised
C) if others in the industry grant credit
D) if the benefits exceed the costs

Question

Quizplus · Accepted Answer

Credit should only be granted to customers if the benefits exceed the costs, which means the company's potential increase in sales and profits from granting credit should outweigh the potential costs of bad debts and other risks associated with credit. The fact that others in the industry grant credit or the desire to minimize bad debts are not sufficient reasons in themselves to grant credit.

Credit Should Be Granted to Customers in Which Circumstance