ARBUS102 Chapter Notes - Chapter 8: Skechers, Accounts Receivable, Income Statement
24 Feb 2016
School
Department
Course
Professor
Document Summary
If credit is extended companies will have to hire people to (a) evaluate whether each customer is creditworthy, (b) track how much each customer owes, and (c) follow up to collect the receivables from each customer: 2. Some customers dispute what they owe or they run into financial difficulties and pay only a fraction of their account balances. The bad debts can be a significant additonal cost of extending credit: 3. Chapter 8 reporting and interpreting receivables bad debt expense, and interest revenue. The following additonal costs make offering consumers credit a losing deal: 1. Even if the company were to collect in full from customers, it would have to wait 30-60 days before receiving the cash. During this period, the company may have to take out a short-term bank loan to pay for other business activities. The interest on such a loan would be another cost of extending credit to customers. written agreement.
