Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2003 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms.
-A decrease in collection efforts will result in ________ in sales volume, ________ in the investment in accounts receivable, ________ in bad debt expenses, and ________ in collection expenditures.
A) an increase; an increase; an increase; a decrease
B) an increase; a decrease; an increase; an increase
C) an increase; a decrease; an increase; a decrease
D) a decrease; a decrease; a decrease; an increase

Question

Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2003 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms. 
-A decrease in collection efforts will result in ________ in sales volume, ________ in the investment in accounts receivable, ________ in bad debt expenses, and ________ in collection expenditures.
A) an increase; an increase; an increase; a decrease 
B) an increase; a decrease; an increase; an increase 
C) an increase; a decrease; an increase; a decrease 
D) a decrease; a decrease; a decrease; an increase

Quizplus · Accepted Answer

A decrease in collection efforts typically makes it easier for customers to purchase on credit, potentially increasing sales volume. However, it also leads to higher accounts receivable as more sales are made on credit, increases bad debt expenses due to less stringent collection, and decreases collection expenditures as less effort is put into collecting debts.

Table 15.6 A Breakdown of Teffan, Inc.'s Outstanding Accounts Receivable Dated June