Which of the following statements is true?
A)New companies must be prepared to incur more bad debts than established businesses as part of the cost of building up a good-customers list.
B)Generally, repeat orders warrant easier credit terms.
C)Companies with high profit margins need to be particularly careful about extending credit to high-risk customers.
D)New companies must be prepared to incur more bad debts than established businesses as part of the cost of building up a good-customers list, and, generally, repeat orders warrant easier credit terms.

Question

Quizplus · Accepted Answer

The statement in option D is true. New companies often have to extend credit to new customers who may have higher risk of defaulting, as part of building a customer base. Repeat orders, on the other hand, indicate reliability and can warrant easier credit terms. However, it is also important for companies with high profit margins to be cautious when extending credit to high-risk customers, as the potential losses from bad debts could impact their profitability.

Which of the Following Statements Is True