There is a cost of extending credit to customers even when the company is able to collect in full its accounts receivable.
BT: Comprehension

Question

Quizplus · Accepted Answer

The cost of extending credit includes the cost of financing the credit, the resources used for credit checks, the cost of maintaining records of accounts receivable, and the risk of bad debts. Even if the company is able to collect in full, these costs are still incurred.

There Is a Cost of Extending Credit to Customers Even