Define each of the following terms:
Credit policy - It refers to the policies and procedures for granting and collecting the loan.
Credit period - It is the length of time between when a customer purchases a product and when the customer payment is due. If the credit period will increase, sales and accounts receivable will also increase.
Credit standards - It evaluates the minimum financial strength a customer is required to have to qualify for credit. Lower credit standards increase sales but also increase bad debts.
Collection policy - It is the process of collecting accounts receivable. A change in collection policy would affect sales, bad debt losses, and days sales outstanding.
Cash discounts - It is a reduction in the percentage of the sales price to encourage early payments by customers. It is usually represented in the form of 2/10, net 30 which means a 2% discount will be given if the receivable will be paid within 10 days.
Assignment Writers are Online Now!
Need to pay someone to write your paper from scratch? We have experts for all types of assignments.