Which of the following statements is true?
I.New companies must be prepared to incur more bad debts than established businesses as part of the cost of building up a good-customers list.
II.Generally,repeat orders warrant easier credit terms.
III.Companies with high profit margins need to be particularly careful about extending credit to high-risk customers.

Question

Quizplus · Accepted Answer

Statement I is true because new companies typically have limited information about their customers and may have to extend credit to attract and retain customers. This increases the risk of bad debts. 
Statement II is also true because repeat customers are more likely to have established credit histories with the company and are therefore considered lower risk. 
Statement III is not true because companies with high profit margins may have more flexibility to absorb bad debts and may be more willing to take risks with high-risk customers to increase sales.

Which of the Following Statements Is True