If the firm's credit period is decreased, the sales volume can be expected to ___________, the investment in accounts receivable can be expected to ___________, and the bad debt expenses can be expected to ___________.
A) increase; increase; decrease
B) increase; increase; increase
C) increase; decrease; decrease
D) decrease; decrease; decrease

Question

Quizplus · Accepted Answer

If the firm's credit period is decreased, customers will have less time to pay their bills, which may result in decreased sales volume. The investment in accounts receivable will also decrease since there will be fewer outstanding customer bills. Finally, bad debt expenses can be expected to decrease because customers have less time to default on their payments, reducing the risk of bad debt.

If the Firm's Credit Period Is Decreased, the Sales Volume