The credit policy variables a firm can use to exercise control over its level of receivables investment include ____.
A) credit standards
B) credit terms
C) collection effort
D) credit standards, credit terms, and collection effort

Question

Quizplus · Accepted Answer

The credit policy variables a firm can use to exercise control over its level of receivables investment include credit standards, credit terms, and collection effort. Credit standards involve the criteria used to determine whether or not to extend credit to a customer. Credit terms involve the time allowed for the customer to pay their invoice. Collection effort involves the activities undertaken to ensure timely payment from customers who have outstanding balances. Together, these three variables can be used to manage a firm's accounts receivable and minimize the risk of bad debt.

The Credit Policy Variables a Firm Can Use to Exercise