Increasing collection expenditures is likely to result in:
A)shorter average collection period.
B)reduced bad-debt losses.
C)higher accounts receivable balances.
D)a and b

Question

Quizplus · Accepted Answer

Increasing collection expenditures can lead to a shorter average collection period, which means that the company is collecting its outstanding receivables more quickly. This would result in a lower number of bad-debt losses since delinquent accounts are being pursued sooner. However, the accounts receivable balances could also increase as a result of increased collection efforts, as more customers may be given additional time to pay their outstanding balances. Therefore, both option A and B are correct, resulting in choice D being the best answer.

Increasing Collection Expenditures Is Likely to Result In