true/false

1. The total investment in receivables mainly depends on the total amount of cash sales and the cash discount amount. ( TRUE / FALSE )

2. The following statement pertains to credit policy: The cost of sales will initially be delayed when a credit policy is first adopted. ( TRUE / FALSE )

3. ABC Co. is considering giving a 2% cash discount to its customers who pay within 10 days (the firm currently offers no discount). If it institutes this policy, it is likely that the buyers will be able to reduce their cost of goods sold. ( TRUE / FALSE )

4. One of the most important factors influencing the length of the credit period offered by the seller is the operating cycle of the seller. ( TRUE / FALSE )

5. Bradley Mfg. changed its credit terms from 2/10 net 30 to 2/10 net 40. In doing so, the firm has lowered the effective annual cost of credit for their customers. ( TRUE / FALSE )