Asked by MacKenzie Little on Jul 14, 2024
Verified
More aggressive collection procedures should:
A) increase credit sales.
B) decrease accounts receivable.
C) increase ACP.
D) All of the above
E) None of the above
Collection Procedures
Established methods used by businesses to follow up on and collect unpaid debts from customers.
Accounts Receivable
Amounts owed to a company by its customers for goods or services that have been delivered but not yet paid for.
ACP
Average Collection Period, indicating the average number of days it takes for a company to receive payments from its customers.
- Assess the repercussions of modifying credit policies and collection protocols on financial performance measures.
Verified Answer
DR
Dejan RadojevicJul 18, 2024
Final Answer :
B
Explanation :
Aggressive collection procedures aim to decrease accounts receivable by speeding up the collection of outstanding debts. This can help improve cash flow and reduce the risk of bad debts. However, it may not necessarily increase credit sales or increase the average collection period (ACP), which is a measure of how long it takes to collect payments from customers.
Learning Objectives
- Assess the repercussions of modifying credit policies and collection protocols on financial performance measures.