Toronto Pneumatic Tools has changed its credit terms to encourage its buyers to pay their accounts receivable more quickly. Which of the following represents the policy that the financial manager has changed?
A) credit ratings
B) account flexibility
C) credit terms
D) collection policy rate

Question

Quizplus · Accepted Answer

The financial manager has changed the credit terms to encourage quicker payment of accounts receivable. Credit terms refer to the agreed-upon terms and conditions of payment between the supplier and the buyer. By changing credit terms, a company can incentivize buyers to pay sooner or penalize them for paying late. Therefore, option C represents the policy that the financial manager has changed. The other options, credit ratings, account flexibility, and collection policy rate, do not reflect the policy change in this scenario.

Toronto Pneumatic Tools Has Changed Its Credit Terms to Encourage