Which of the following actions is taken to reduce the collections period for receivables of a firm?
A) Increasing the sales of the firm
B) Decreasing the purchases of the firm
C) Modifying the credit policy of the firm
D) Changing the inventory valuation method of the firm
E) Revising the working capital policy of the firm

Question

Quizplus · Accepted Answer

Modifying the credit policy of the firm can help reduce the collections period for receivables by changing the terms of credit extended to customers. The firm can reduce the credit period, require down payments or institute a penalty for late payment. This can help to encourage customers to pay off their debts on time and reduce the overall collections period. Increasing sales, decreasing purchases, changing inventory valuation method, and revising the working capital policy may or may not have an impact on the collections period for receivables.

Which of the Following Actions Is Taken to Reduce the Collections