When a firm decreases or cancels a cash discount, sales are expected to___________ _, the investment inaccounts receivable is expected to _, the bad debt expense is expected to___________ , and theprofit per unit is expected to___________ .

Question

When a firm decreases or cancels a cash discount, sales are expected to___________ _, the investment inaccounts receivable is expected to _, the bad debt expense is expected to___________  , and theprofit per unit is expected to___________  .

Quizplus · Accepted Answer

When a firm decreases or cancels a cash discount, sales are expected to decrease as the incentive for early payment is reduced. The investment in accounts receivable is expected to increase because customers may take longer to pay. The bad debt expense is expected to increase due to delayed payments, and the profit per unit is expected to increase as the firm no longer offers the discount.

When a Firm Decreases or Cancels a Cash Discount, Sales