The credit policy variables that 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 that a firm can use to exercise control over its level of receivables investment are credit standards, credit terms, and collection effort. Credit standards determine which customers are offered credit, credit terms specify the period of time for which credit is extended, and collection effort involves the actions taken to collect outstanding debts. By adjusting these variables, a firm can manage its level of investment in receivables and reduce the risk of bad debts. Therefore, D is the correct answer.

The Credit Policy Variables That a Firm Can Use to Exercise