Bad Debt and Business Impact Quiz
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Questions and Answers

What happens to bank loans in the United States with more than ninety days' arrears?

  • They are provisioned for
  • They are classified as problem loans (correct)
  • They are considered as bad debts
  • They are immediately written off

    • Which of the following is a reason why a creditor may not take action to collect a bad debt?

  • The creditor is not aware of the debt
  • The creditor does not want to put in the effort to collect
  • The debtor has the money to pay but refuses to do so
  • The debtor is in the process of going into liquidation (correct)

    • What can cause a high bad debt rate for a business?

  • Ineffective credit and collections process (correct)
  • Thorough credit checks of new customers
  • Effective credit and collections process
  • Proactive collections team

    • According to accounting sources, what should be done with a bad debt?

    <p>It should be written off to the profit and loss account</p> Signup and view all the answers

    What can lead to a company facing the risk of a high bad debt?

    <p>Ineffective management of credit and collections process</p> Signup and view all the answers

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