Which of the following is one drawback of offering credit customers more time to pay?
A) It delays the receipt of the cash the firm needs to pay its obligations.
B) It causes sales revenue to be incorrectly measured under the accrual method.
C) It increases the cost of credit to customers.
D) It increases the firm's taxable income.

Question

Quizplus · Accepted Answer

Offering credit customers more time to pay delays the receipt of cash for the firm, which could negatively affect the firm's ability to pay its own obligations on time. This delay in cash receipt could also impact the firm's cash flow and working capital.

Which of the Following Is One Drawback of Offering Credit