When customers pay at the point of sale, there is no need to send a bill and wait for the payment, which decreases the processing delay and availability delay. Therefore, the collection time is decreased. The other choices do not accurately describe the relationship with collection time.

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Collection Time

Question 281

Multiple Choice

Collection time:

A) Is equal to mail time plus the processing delay minus the availability delay.
B) Increases when payments are made electronically.
C) Increases when customers' bills are sent electronically.
D) Is decreased when customers pay at the point of sale rather than when they are billed.
E) Is independent of the business nature of a ﬁrm.

Correct Answer: