Which of the following is a disadvantage of selling on credit?
A) Sales can be made to a more diverse group of customers.
B) Profits are increased by making sales to a wider range of customers.
C) Some customers do not pay, creating an expense.
D) Prices must be reduced when selling on credit.

Question

Quizplus · Accepted Answer

Selling on credit can lead to some customers not paying, which can create a bad debt expense and ultimately decrease overall profits. While selling on credit does allow for sales to a wider range of customers, it also comes with the risk of non-payment. Prices do not necessarily have to be reduced when selling on credit, and the ability to make sales to a more diverse group of customers can actually increase profits.

Which of the Following Is a Disadvantage of Selling on Credit