The net effect of changes in the cash discount period is quite difficult to analyze because they are directly attributable to the three forces affecting the firm's investment in accounts receivable.

Question

Quizplus · Accepted Answer

The statement is true, as changes in cash discount period can be influenced by the three factors that affect a firm's investment in accounts receivable: sales volume, collection period, and bad debt losses. Therefore, it is challenging to isolate the impact of the cash discount period alone on accounts receivable and the firm's overall financial position.

The Net Effect of Changes in the Cash Discount Period