Suppose a firm changes its credit policy from 2/10 net 30 to 3/10 net 30.The change is meant to meet competition, so no increase in sales is expected.The average accounts receivable balance will probably decline as a result of this change.

Question

Quizplus · Accepted Answer

The change in credit policy will encourage customers to pay more quickly in order to take advantage of the discount offer. This means that the average accounts receivable period will be shorter and the balance will likely decline.

Suppose a Firm Changes Its Credit Policy from 2/10 Net