Page 515 - Business Principles and Management

C HAPTER 18 A SSESSMENT

DETERMINE THE BEST ANSWER

11. Which of the following would not be an efficient way for a business
to accept all major credit cards?
a. Work with each major company to establish a credit account.
b. Seek a merchant account provider.
c. Establish a private credit card system that also accepts other
cards.
d. All are appropriate ways.
12. A person using revolving credit is approved to
a. make charges at any time
b. charge less than the approved amount
c. pay off the full amount by the end of the billing period without a
finance charge
d. all of the above
13. _____ cards are used by businesses for computer security, in cable
and satellite television receivers, and in cell phones.
a. Credit
b. Debit
c. Affinity
d. Smart
14. To determine the creditworthiness of people or organizations, busi-
nesses apply the
a. four Cs of credit
b. 80/20 rule
c. “keep it simple” policy
d. minimum approval rate standard
15. Which of the following is an objective managers try to meet when
establishing credit procedures?
a. Give customers extra time to pay if they request it.
b. Immediately drop customers who cannot meet payment deadlines.
c. Use procedures that retain the goodwill of the customer.
d. None of the answers is correct.
16. Businesses use aging of accounts to
a. study the effectiveness of accounts receivable collection
b. determine which accounts payable to pay first
c. decide when equipment needs to be replaced
d. send credit customers thank-you cards on the anniversary of the
date they opened their accounts
17. Which of the following is not a fact on which the concept of insur-
ance is based?
a. It is difficult for a business to predict whether it will have specific
losses or the amount of those losses.
b. Many businesses face the same type of perils.
c. Insurance companies can accurately estimate the probability of
certain types of losses.
d. Insurance companies insure against both predictable and unpre-
dictable losses.

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