Which of the following is NOT a method for screening debtors?

Prepare for the SACE Stage 2 Accounting Exam. Test your knowledge with flashcards and multiple choice questions, with hints and explanations for each question. Get ready to excel!

The choice of evaluating supplier contracts is not a method for screening debtors because it primarily focuses on assessing the terms and conditions under which a business sources its materials and services from suppliers, rather than evaluating the creditworthiness or reliability of those who owe money to the business (the debtors).

Screening debtors involves methods that assess an individual's or entity's ability to repay debts. Performing a credit history check helps in determining the past borrowing behavior and repayment reliability of potential debtors. Asking for evidence of pay slips provides insight into an individual's income stability and capacity to make payments. Reviewing historical payment records allows a business to analyze the payment behavior of existing debtors or potential clients based on their past transactions.

Given that evaluating supplier contracts does not pertain to the assessment of debtor behavior, it is the method that does not align with the objective of screening debtors.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy