A-One Garage Doors
Having worked in the door installation industry for about six years, Harry has started his own company called "A-One Garage Doors". The company assembles, installs, provides services and repairs for both residential and industrial garage doors. Like any other business when it comes to residential accounts Harry's conditions are cash but for industrial accounts he thinks he should offer credit. Furthermore, he is contemplating what level of inventory he should keep to meet the demand.

-Harry should be made aware that all of these are negative effects of extending credit to his customers EXCEPT:
A)he may end up borrowing money to fill the gap.
B)sometimes customers who use credit will not pay.
C)it delays the receipt of cash.
D)it increases the cost of selling.

Question

A-One Garage Doors
Having worked in the door installation industry for about six years, Harry has started his own company called "A-One Garage Doors". The company assembles, installs, provides services and repairs for both residential and industrial garage doors. Like any other business when it comes to residential accounts Harry's conditions are cash but for industrial accounts he thinks he should offer credit. Furthermore, he is contemplating what level of inventory he should keep to meet the demand.

-Harry should be made aware that all of these are negative effects of extending credit to his customers EXCEPT:
A)he may end up borrowing money to fill the gap.
B)sometimes customers who use credit will not pay.
C)it delays the receipt of cash.
D)it increases the cost of selling.

Quizplus · Accepted Answer

The given options mention only negative effects of extending credit to customers but do not provide any positive effects. The correct option among the given choices that is not a negative effect of extending credit to customers is option D, i.e., it increases the cost of selling.

A-One Garage Doors Having Worked in the Door Installation Industry for About Six