Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Each company must establish its own credit policy based on the ground condition and the environment wherein it is operating. The major goal of the credit policy is to stimulate sales and also control expenses and bad debts linked with granting credit. The subsequent are the major components of a credit policy.
1) Credit period to be permitted to general customers
2) Credit period to be permitted to special customers and the criteria for defining special customer to be predefined
3) Credit rating system
4) Cash discount policy or discount policy for pre-payment through debtors
5) Collection policy
6) Accounting system and management information system i.e. MIS for scrutiny and efficient management of debtors
7) Policy for dealing along with bad and doubtful debts
8) Credit insurance cover
9) Exact documentation of credit sales.
If we regroup the above elements they can be classified in the four dimensions of a firm's credit policy that are given as:
a) Credit standards
b) Credit period
c) Cash discount
d) Collection effort.
Deciding on the credit policy involves a tradeoff among sales and expenses or losses. Decreasing credit standards would raise sales but at similar time would lead to rise in bad debt losses. Similar is true for another variable of credit policy also. Here let us examine the consequence of each of these variables on the total profit on the firm.
Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4
Hickory Company manufactures two products—14,000 units of Product Y and 6,000 units of Product Z. The company uses a plantwide overhead rate based on direct labor-hours. It is cons
Disadvantages of ratio analysis 1) False results: ratios are based upon the financial statement. In case financial ratio is incorrect or the data upon which ratios are based
Accounting Profit is a company's sum total earnings, computed according to Generally Accepted Accounting Principles (GAAP), and involves the explicit costs of operating business, l
1 Describe the impact of different types of standards on motivations, and specifically, the likely effect on motivation of adopting the labor standard recommended for Geeta & Compa
Ask queThe standard cost of chemical mixture ~ PQ’ is as follows: 40% of material P @ Rs. 400 per kg. 60% of material Q @ Rs. 600 per kg. A standard loss of 10% is normally anticip
what is the not differential cost
State Budgetary Control A budget is a quantitative expression of a plan of action relating to the forthcoming budget period. It represents a written operational plan of managem
Pike Corporation paid $100,000 for a 10% interest in Salmon Corp. on January 1, 2010, when Salmon''s stockholders'' equity consisted of $800,000 of $10 par value common stock and
Explain Functional classification a) Liquidity ratio: these are the ratio which measures the short term solvency or financial position of a firm. These ratios are calculati
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd