Which of the following actions will tend to decrease the trade receivables period? I.Loosening the standards for granting credit to customers.
II)Increasing the discount for early payment by credit customers.
III)Increasing the ﬁnance charges applied to all customer balances outstanding over thirty days.
IV)Granting discounts for cash sales.
A)I and III only.
B)II and IV only.
C)I, II and IV only.
D)II, III and IV only.
E)I, II, III and IV.

Question

Quizplus · Accepted Answer

II) Increasing the discount for early payment by credit customers, III) Increasing the finance charges applied to all customer balances outstanding over thirty days, and IV) Granting discounts for cash sales will all incentivize customers to pay their debts more quickly, thus decreasing the trade receivables period. Loosening credit standards (I) would likely increase the trade receivables period by potentially increasing the number of less creditworthy customers who might delay payments.

Which of the Following Actions Will Tend to Decrease the Trade