Extending credit to customers will introduce all of the following additional costs except:
A)increased wage costs will be incurred to hire people to evaluate whether each customer is creditworthy,track how much each customer owes,and follow up to collect the receivable from each customer.
B)bad debt costs will result when amounts cannot be collected from customers.
C)delayed receipt of cash may result in requiring the company to take out short-term loans and incur interest costs.
D)decreased gross profit from reduced 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 and profits.

Extending Credit to Customers Will Introduce All of the Following