The credit period that the business grants with credit sales can be used as a guideline in the assessment of the debtors’ collection period.

Question

True

False

Answer 1

True

The credit period that a business grants with credit sales does serve as a guideline for assessing the debtors’ collection period. It indicates the expected time frame within which payments are typically collected from customers. If the actual collection period exceeds the granted credit period, it may signal potential issues in the collection process or customer payment behavior.