Extending the credit period granted, with all other components of the credit policy remaining unchanged, will most likely cause:
A) a decrease in bad debts.
B) a decrease in debtors.
C) a decrease in sales.
D) none of the above.

Question

Quizplus · Accepted Answer

Extending the credit period typically leads to an increase in sales because more customers may find the terms attractive, potentially increasing debtors as more customers take advantage of the credit terms. It may also lead to an increase in bad debts if customers are unable to pay within the extended period. Therefore, none of the provided options accurately describe the likely outcome of extending the credit period.

Extending the Credit Period Granted, with All Other Components of the Credit