Question

Which of the following are costs imposed on the firm by customers who are slow to pay off their accounts receivable?

O decrease in assets
O increase in working capital
O increase in supplies expense
O increase in collection costs

Answer 1

The costs imposed on the firm by customers who are slow to pay off their accounts receivable include an increase in working capital and an increase in collection costs.

option d is the correct

Step-by-step explanation:

The costs imposed on the firm by customers who are slow to pay off their accounts receivable include an increase in working capital and an increase in collection costs.

An increase in working capital occurs because when customers delay payment, the firm's cash flow is affected, and the firm may need to use additional funds to cover its ongoing expenses or invest in other opportunities.

Collection costs also increase because the firm needs to spend more resources on chasing down late payments, such as hiring debt collectors or taking legal action if necessary.