Credit approval policies are implemented by organizations primarily to
A)determine revenue recognition policies.
B)ensure customer satisfaction.
C)prevent lapping by the accounts receivable department.
D)ensure the realization of receivables.

Question

Quizplus · Accepted Answer

Credit approval policies are implemented by organizations to ensure the realization of receivables, which means to ensure that the organization gets paid for the products or services it sells on credit. The credit approval policies help to evaluate the creditworthiness of the potential customer before extending credit, therefore improving the chances of receiving payment, preventing bad debt, and ensuring the realization of receivables.

Credit Approval Policies Are Implemented by Organizations Primarily to