It would be common for a ﬁrm which has adhered to a cash sales policy to experience a sudden
and signiﬁcant, but short-term, decrease in cash receipts immediately following the time the ﬁrm
converts to a credit policy.

Question

Quizplus · Accepted Answer

This is true because when a firm switches from a cash sales policy to a credit policy, customers may take advantage of the opportunity to delay payment, resulting in a decrease in cash receipts in the short-term. However, over time, the firm may see an overall increase in sales due to the availability of credit for customers.

It Would Be Common for a ﬁRm Which Has Adhered