Question 1: Lengthening the credit period _____ the price paid by the customer. Generally, this acts to _____ sales.
- increases; increase
- increases; decrease
- decreases; decrease
- decreases; increase
- increases; have no effect on
Question 2: Which of the following is not true concerning considerations in setting a credit policy?
- 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.