Which of the following statements is correct?
A) Other things held constant,the higher a firm's days sales outstanding (DSO),the better its credit department.
B) A firm will relax its credit standards only if it expects bad debts will not increase because of the change.
C) If a firm which sells on terms of "net 30" changes its policy and begins offering all customers terms of "2/10,net 30," and if no change in sales volume occurs,then the firm's DSO will probably increase.
D) If a firm sells on terms of 2/10,net 30,and its DSO is 30 days,then its aging schedule would probably show some past due accounts.
E) Statements a,b,c,and d are all false.

Question

Quizplus · Accepted Answer

If a firm offers terms of 2/10, net 30 and its DSO is 30 days, it indicates that not all customers are taking advantage of the discount, leading to some accounts being past due.

Which of the Following Statements Is Correct