Which of the following statements about the tradeoffs of extending credit is not correct?
A)Extending credit to at least some customers is necessary in a competitive market to avoid losing sales to competitors.
B)Even if a company were to collect in full from customers,there would be other additional costs introduced by extending credit to customers.
C)Even though additional costs are incurred if credit is extended,a company expects that the additional revenue will be more than sufficient to offset the additional costs.
D)Even if there are no bad debts from credit sales,the delayed receipt of cash will always increase additional costs beyond the increased revenue from the credit sales.

Question

Quizplus · Accepted Answer

The disadvantages of selling on credit are increased wage costs,bad debt costs,and delayed receipt of cash.The advantage of extending credit is that it helps business customers buy products and services,thereby increasing the seller's revenues.(If the additional costs are expected to exceed the increased revenue,the company would not choose to extend credit to customers. )

Which of the Following Statements About the Tradeoffs of Extending