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5. Accounts receivable a Aa Effective credit management involves establishing credit standards for extending credit to customers, determining the company's terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence The minimum financial strength a customer must have to be granted credit is indicated by the company's Consider the case of Water and Power Co.: Water and Power Co. has a very attractive credit policy, and none of its customers pays in cash when the firm makes a sale. Water and Power Co. sells to its customers on credit terms of 3/10, net 30 If a customer bought $125,000 worth of goods and paid the firm cash eight days after the sale, how much cash would Water and Power Co. get from the customer? O $109,375 O $121,250 O $125,000 O $131,250 If the customer paid off the account after 15 days, Water and Power Co. would receive Approximately 40% of water and Power Co.'s customers take advantage of the discount and pay on the 10th day The remaining 60% take an average of 35 days to pay off their accounts, what is water and Power Co.'s days sales outstanding (DSO), or the average collection period? O 25.0 days O 27.5 days O 22.5 days O 23.8 days

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