Asked by Hannah Kristen on Jul 06, 2024
Verified
The most appropriate upper limit for the credit period is the:
A) Length of the buyer's operating cycle.
B) Date on which the seller must pay its supplier.
C) Length of the seller's inventory period.
D) Length of the buyer's inventory period.
E) Average collection period multiplied by two.
Operating Cycle
The duration between the acquisition of inventory by a business and the receipt of cash from accounts receivable, indicating how quickly a company turns its product into cash.
- Comprehend the influence of competition and product characteristics on credit period determinations.
Verified Answer
AM
Amber MoreheadJul 11, 2024
Final Answer :
A
Explanation :
The most appropriate upper limit for the credit period is the length of the buyer's operating cycle, as it reflects the time taken by the buyer to convert purchases into cash, ensuring they have the ability to pay within the credit period.
Learning Objectives
- Comprehend the influence of competition and product characteristics on credit period determinations.