If the firm's cash discount period is increased, the sales volume can be expected to ________, the bad debt expenses can be expected to ________, and the profit per unit can be expected to ________.

Question

Quizplus · Accepted Answer

If the firm's cash discount period is increased, customers may delay paying their bills, which increases accounts receivable and reduces cash flow. This may result in a decrease in sales volume since customers may prefer the longer payment period. Bad debt expenses may increase because there is a longer delay in receiving payment, increasing the risk that the customer may not pay at all. Finally, the profit per unit may decrease because the cost of financing accounts receivable increases with longer payment periods. Therefore, A is the correct answer.

If the Firm's Cash Discount Period Is Increased, the Sales