There are advantages and disadvantages to extending credit to customers.Which of the following statements below expresses the general reason for extending credit?
A)Lower sales revenues exceed bad debt savings.
B)Wage cost savings exceed delayed receipt of cash.
C)Gross profits exceed bad debt costs.
D)The speed of cash receipts exceeds bad debt costs.

Question

Quizplus · Accepted Answer

Generally,managers find that the incremental gross profit obtained by increasing sales on account is greater than the additional costs of extending credit (increased wage costs,bad debt costs,and delayed receipt of cash).

There Are Advantages and Disadvantages to Extending Credit to Customers