Which is correct with regards to the effects of restricting credit standards? * O An increase in recognition of doubtful accounts expense will probably happen O Quantity of units sold will probably decrease and will result to a lower sales revenue O Positive impact on the net profit can be noted from decline in the quantity of goods sold O Investment in accounts receivable will likely increase

Which is correct with regards to the effects of restricting credit standards? * O An increase in recognition of doubtful accounts expense will probably happen O Quantity of units sold will probably decrease and will result to a lower sales revenue O Positive impact on the net profit can be noted from decline in the quantity of goods sold O Investment in accounts receivable will likely increase

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle

Section: Chapter Questions

Problem 20MCQ

See similar textbooks

Similar questions

Which of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditors
Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold d. Quantity of units sold will probably decrease and will result to a lower sales revenue
Question Which of the following changes in credit standards and conditions would cause an improvement in profit? A) An increase in the percentage of doubtful collections. B) An increase in collection expenses. C) Decrease in units sold D) Increase in the turnover of accounts receivable.
A change in credit policy has caused an increase in sales, an increase in discounts taken, a reduction in the investment in accounts receivable, and a reduction in the number of doubtful accounts. Based upon this information, we know that a)Net income has increased b)The average collection period has decreased. c)Gross profit has declines d)The size of of the discount offered has increased
Question By restricting credit, and granting short maturities to speed up accounts receivable turnover, sales may decrease. True or false?
31 - Which of the following is not among the consequences of a loose credit policy ? a) Sales increase B) Collection expenses increase NS) Funds tied to receivables increase. D) The amount of doubtful receivables decreases. TO) Transaction costs increase as they analyze new customers.
What is the effect of the following situations on the cost of accounts receivable financing? (A) A more thorough credit check is undertaken. (B) Receivables are sold without recourse CHOOSE THE LETTER OF CORRECT ANSWERA. (A) Increase; (B) DecreaseB. (A) Decrease; (B) IncreaseC. (A) Decrease; (B) DecreaseD. (A) Increase; (B) IncreaseE. (A) Increase; (B) No effect
Suppose customers express greater satisfaction with the accuracy of their charge account bills but the performance measures for the average age of accounts receivable and for bad debts do not improve. Explain why this might happen.
Question If the % of uncollectible accounts does not change, there cannot be a savings for this concept simply because of a decrease in sales. true or false?
Which of the following methods may not be appropiate for estimating bad debt expense? a. Percentage of net credit sales b. Percentage of outstanding accounts receivables c. Aging of accounts receivables d. Percentage of sales
Which of the following methods may not be appropiate for estimating bad debt expense? a. percentage of net credit sales b. percentage of outstanding accounts receivable c. aging of accounts receivable d. percentage of sales
Statement I - Relaxation of Credit Standard increases the Investment in Accounts receivableStatement II - Restriction of credit standard may decrease the chance of incurring bad debts that ultimately affects the profit positively a. False; True b. True; False c. False; False d. True; True Which of the following statements is most correct? a. Other things held constant, the higher a firm’s days sales outstanding (DSO), the better its credit department. b. If a firm sells on terms of 2/10, net 30, and its DSO is 30 days, then its aging schedule would probably show some past due accounts. c. If a firm that sells on terms of net 30 changes its policy and begins offering all customers terms of 2/10, net 30, and if no change in sales volume occurs, then the firm’s DSO will probably increase.