Which of the following statements regarding the tradeoffs of extending credit is not true?
A)Extending credit to at least some customers is necessary in a competitive market to avoid losing sales to competitors.
B)Even if a company were to collect in full from customers,there would be a cost of extending credit to customers.
C)Even though additional costs are incurred if credit is extended,a company expects that the additional revenue will be more than sufficient to offset the additional costs.
D)Even if there are no bad debts from credit sales,the delayed receipt of cash will always increase additional costs beyond the increased revenue from the credit sales.

Question

Quizplus · Accepted Answer

This statement is not always true. If a company has sufficient cash or can obtain financing at a low cost, the additional costs of delayed receipt of cash may not offset the increased revenue from credit sales. However, in most cases, extending credit will result in additional costs beyond the increased revenue from credit sales.

Which of the Following Statements Regarding the Tradeoffs of Extending