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CTP · Question #328
(Topic 4) ABC Company offers a discount of 2/10, net 30 to its customers. ABC factored its accounts receivables with an outside vendor, under a "with recourse" arrangement. What impact might this…
The correct answer is B. Improve cash conversion cycle. See the full explanation below for the reasoning.
Question
- (Topic 4)
ABC Company offers a discount of 2/10, net 30 to its customers. ABC factored its accounts receivables with an outside vendor, under a “with recourse” arrangement. What impact might this have on the company?
Options
- AIncrease days sales outstanding.
- BImprove cash conversion cycle.
- CReduce bad debt expense.
- DMore customers may take the discount.
How the community answered
(20 responses)- A20% (4)
- B70% (14)
- C5% (1)
- D5% (1)
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