Question

Which of these is true about providing credit?
A) It usually results in lower sales revenues.
B) It accelerates the receipt of cash.
C) It reduces the cost of selling.
D) It forces all the customers to pay.

Answer 1

I'm going to go with the first one because of this paragraph I found. Providing credit is risky.

The revenue cycle begins with the sale of the business' goods and/or services to its customer. Businesses can either collect the revenue in its entirety in cash at the moment of sale or make the sale on credit or partial credit. If the customer uses credit, that creates an account receivable owed to the business that the business needs to collect. The revenue cycle is not over until the business either collects the account receivable or considers it uncollectible and writes it off of its accounts.