If the firm's credit period is increased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________.
A) increase; decrease; decrease
B) increase; increase; decrease
C) increase; increase; increase
D) decrease; decrease; decrease

Question

Quizplus · Accepted Answer

Increasing the credit period typically leads to higher sales volume as customers have more time to pay. This results in higher accounts receivable as more sales are made on credit. However, it also increases the risk of bad debts as customers may default on payments.

If the Firm's Credit Period Is Increased, the Sales Volume