Asked by Taylor Peimbert on Jul 09, 2024
Verified
A firm's credit policy affects both its credit sales and its ACP.
Credit Policy
The guidelines a company follows to determine the amount and terms of credit to extend to customers.
ACP
Average Collection Period, a metric that measures the average number of days it takes for a company to collect its accounts receivable.
- Learn about the aspects that shape a company's level of receivables and how credit policy modifications affect these levels.
- Acquire knowledge on the impact of credit policy on bad debts and the efficacy of accounts receivable (ACP).
Verified Answer
LM
lyeshia martinezJul 11, 2024
Final Answer :
True
Explanation :
A firm's credit policy, such as the credit terms, credit limits, and collection policies, can influence the amount of credit sales it makes and the length of time it takes to collect those sales, which ultimately affects its ACP (average collection period).
Learning Objectives
- Learn about the aspects that shape a company's level of receivables and how credit policy modifications affect these levels.
- Acquire knowledge on the impact of credit policy on bad debts and the efficacy of accounts receivable (ACP).
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