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Credit periods and credit policies

Can you help me understand these questions?

27. Lengthening the credit period _____ the price paid by the customer. Generally, this acts to _____ sales. (Points: 3)
increases; increase
increases; decrease
decreases; decrease
decreases; increase
increases; have no effect on

28. Which of the following is not true concerning considerations in setting a credit policy? (Points: 3)
A firm that supplies a perishable product will tend to offer restrictive credit terms.
A firm whose customers are in a high-risk business will tend to offer restrictive credit terms.
Lengthening the credit period effectively reduces the price paid by the customer.
Small accounts, associated with firms that find it difficult to acquire a line of credit, tend to receive longer credit periods.
None of the above.

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27. decreases; increase

Since the credit period is longer the customer actually saves on interest and ...

Solution Summary

The solution explains some multiple choice questions relating to credit periods and credit policies

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