Which one of the following statements is false as it relates to considerations firms use when establishing a credit policy?
A)A firm that supplies a perishable product will tend to offer restrictive credit terms.
B)A firm whose customers are in a high-risk business will tend to offer restrictive credit terms.
C)Lengthening the credit period effectively reduces the price paid by the customer.
D)Small accounts,associated with firms that find it difficult to acquire a line of credit,tend to receive longer credit periods.
E)Larger accounts tend to receive more favorable credit terms.

Question

Quizplus · Accepted Answer

Lengthening the credit period effectively reduces the price paid by the customer because it allows the customer to use the product or service while delaying payment, which can be seen as a financial benefit or discount. However, small accounts, especially those associated with firms that find it difficult to acquire a line of credit, typically do not receive longer credit periods. Instead, they are often subject to more restrictive credit terms due to the higher perceived risk of default. This makes statement D false.

Which One of the Following Statements Is False as It