If the cash discount period is increased, a firm's investment in accounts receivable is expected to ________.

Question

Quizplus · Accepted Answer

If the cash discount period is increased, it will encourage more customers to take advantage of the discount, resulting in fewer outstanding accounts receivable. Non-discount takers are likely to pay earlier to take advantage of the cash discount, reducing the firm's investment in accounts receivable. However, the other options do not represent the likely outcome of increasing the cash discount period.

If the Cash Discount Period Is Increased, a Firm's Investment