Credit approval policies are implemented by organizations primarily to accomplish which of the following objectives?
A)To determine revenue recognition policies.
B)To ensure customer satisfaction.
C)To prevent lapping by the accounts receivable department.
D)To minimize credit losses.

Question

Quizplus · Accepted Answer

Credit approval policies are implemented by organizations to minimize credit losses. These policies help in assessing the creditworthiness of the customer and deciding whether to extend credit or not. By doing so, the organization can avoid extending credit to high-risk customers who have a higher probability of defaulting on their payments, thus minimizing credit losses. Additionally, credit approval policies also help in defining credit terms that customers must adhere to, reducing the risk of default and maximizing the collection of accounts receivable.

Credit Approval Policies Are Implemented by Organizations Primarily to Accomplish