Lengthening the credit period is likely to result in all of the following except:
A)higher credit sales.
B)more cash sales.
C)larger investment in receivables.
D)longer average collection period.

Question

Quizplus · Accepted Answer

Lengthening the credit period would encourage more credit sales and as a result, the investment in receivables would increase, and the average collection period would linger. However, it would not result in more cash sales. Instead, it would have an inverse effect on cash sales as customers would have more time to pay their credit balance rather than making cash payments upfront.

Lengthening the Credit Period Is Likely to Result in All