Question

If a merchandiser accepts valid customer VISA cards as payment for legitimate merchandise sales, the merchandiser will typically have some bad debt expense arising from such sales transactions.

A.True
B.False

Answer 1

Merchants typically do not incur bad debt expense from valid VISA card transactions because the credit card company pays immediately, and the risk of non-payment lies with the credit card company, not the merchant.

Step-by-step explanation:

Whether a merchandiser will have some bad debt expense arising from sales transactions using a VISA card is false. When a customer uses a VISA card to make a purchase, the credit card company immediately transfers money from its checking account to the seller.

At the end of the month, the user owes the money to the credit card company. Given that the transaction involves immediate payment to the merchant, the risk of bad debt lies with the credit card company rather than the merchant.

The merchant will typically receive full payment for valid sales transactions processed through VISA cards, thus not incurring bad debt expenses as a result of these transactions.