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Sales on Credit - Research Paper Example
Author : cicerobogisich
Finance & Accounting
Pages 5 (1255 words)
Class Name Date Sales on Credit Thesis: Sales to be made on credit is governed by terms and conditions that lead to increased allocation for general-purpose credit cards, accounts receivable, notes payable and bad debts entries in the books of accounts I…
More than that, the firms allow sales of large volume of goods on credit to ensure a larger increase in its applicability to customers. As a result, companies focus on more credit sales to improve sales, ensure attainment of success with the intense competition among business firms while offering the customers with flexible terms of payment that suit them. Considerably sales on credit involve increased allocation for general-purpose credit cards, accounts receivable, notes payable and bad debts entries in the books of accounts. General Preview of Sales on Credit Even though, the option of selling goods to customers for cash remains viable companies have to allow room for sales on credit. More significantly, credit trade acts as an important factor in both, the sales and procurement operations and the corporate asset-liability management as it ensures success in meeting the targeted market of customers. With more risks associated with sales of goods on credit, a company incurs more cost account receivable as the anticipated payment accrue while the likelihood of bad debt occurrence depends on the credit ability of the customers (Warren, Reeve & Duchac 361). In most cases, companies carry out credit analysis of the respective clients who wish to be issued goods and services on credit as a way of being assured that the amount of money owed would be paid. ...