Accounting HELP!?

Question

The CFO of PQR Inc. was advised by his credit manager to give better credit terms to new customers to induce sales. The CFO was concerned about the effects of doing the same on the financial statements, such as total assets and return on total assets. In your opinion, what could be the possible effects of following the advice of the credit manager on the financial statement items?

Accounts officers at Xerox corporation discovered that significant errors have been made in the valuation of inventory and are worried that it might have significant impact on the Net Income and Earnings per share. What are the possible top 3 effects of the errors on net income? What could have been the top 2 reasons behind incorrect valuation of the inventory?

Answer 1

to answer your credit manager question. some of the effects could be. 1) you create a satisfied customer. 2) Facilitate volume purchases. 3) easily bring repeat purchases. you can do all this now because the customer that was just window shopping becomes a buyer with this new found credit.