As credit standards are tightened, sales are expected to ________ and the investment in accounts receivable is expected to ________.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) decrease; increase

Question

Quizplus · Accepted Answer

When credit standards are tightened, fewer customers are able to buy on credit, leading to a decrease in sales. Additionally, with fewer customers buying on credit, the company's investment in accounts receivable (money owed by customers) also decreases.

As Credit Standards Are Tightened, Sales Are Expected to ________