Question

Required information

Accounts receivable are amounts due from customers for credit sales. A subsidiary ledgerlists amounts owed by each customer. Credit sales arise from at least two sources:

(1) sales on credit and
(2) store credit card sales.
Sales on credit refers to a company's granting credit directly to customers. Store credit card sales involve customers' use of store credit cards.

Sellers allow customers to use credit cards for all of the following reasons: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) ?

a. seller does not have to decide who gets credit
b. seller accepts the risk for extending credit to customers
c. seller receives cash sooner than if credit is granted directly to the customers
d. may allow seller to increase sales volume
e. seller determines which customers receive credit and how much

Answer 1

a) c) d)

Step-by-step explanation:

a) The seller does not have to decide who gets credit - this is done by the card issuer

c) seller receives cash sooner than if credit is granted directly to the customers - The cash is received from the card issuer

d) may allow seller to increase sales volume - As cash is available to those who otherwise might not have it for purchases