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What is the effect of extending the collection period for accounts receivable? The collection cost will be reduced. Cash flows from operations may be higher than expected for the company’s sales. The company should expand operations with its excess cash. Bad debt expense will generally be higher.

What is the effect of extending the collection period for accounts receivable? The collection cost will be reduced. Cash flows from operations may be higher than expected for the company’s sales. The company should expand operations with its excess cash. Bad debt expense will generally be higher.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...
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What is the effect of extending the collection period for accounts receivable?

The collection cost will be reduced.

Cash flows from operations may be higher than expected for the company’s sales.

The company should expand operations with its excess cash.

Bad debt expense will generally be higher.

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By extending the collection period, Debtors will be encouraged to purchase more and may eventually result in increase in company's expected sales.

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