What risk increases by giving too many credit sales in handicrafts?
Answer and explanation
Correct answer: The risk of delayed or non-payment by customers may increase
Excessive credit sales increase the risk that customers may pay late or may not pay at all. This can leave an artisan short of cash for raw materials, wages, and other expenses. Option A is a possible consequence of this risk, whereas option B states the risk directly. Exam tip: distinguish between the collection risk in credit sales and its effect on cash flow.
Frequently asked questions
What is the correct answer to this question?
The risk of delayed or non-payment by customers may increase
Why is this the correct answer?
Excessive credit sales increase the risk that customers may pay late or may not pay at all. This can leave an artisan short of cash for raw materials, wages, and other expenses. Option A is a possible consequence of this risk, whereas option B states the risk directly. Exam tip: distinguish between the collection risk in credit sales and its effect on cash flow.
Which subject and chapter does this question cover?
This is a Class 11 Home Science question. Chapter: Work, Livelihood and Career. Topic: Traditional occupations in India - Handicrafts.
