Asked by cassaundra berbaum on Jul 26, 2024
Verified
Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. It is reasonable to assume that the firm's ACP will be increased by this action.
Credit Terms
The conditions under which credit will be extended to a borrower, including the repayment schedule, interest rate, and duration of the loan.
ACP
Average Collection Period, measuring the average number of days it takes a company to collect its accounts receivable.
- Grasp the significance of changes in credit terms on a firm's Accounts Receivable Collection Period (ACP).
Verified Answer
SM
Serena McCowanJul 27, 2024
Final Answer :
True
Explanation :
Changing the credit terms from 2/10 net 30 to 2/10 net 40 extends the period before the full payment is due, which likely increases the Average Collection Period (ACP) as customers have more time to pay.
Learning Objectives
- Grasp the significance of changes in credit terms on a firm's Accounts Receivable Collection Period (ACP).