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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › December 2014 exam
Hi sir, for December 2014 exam question Q5a) the deficiency stating the following ,
” Credit limits are determined by the finance director when a new trade customer is set up in the system. However, these limits could be out of date, resulting in limits being too high and sales being made to poor credit risks or too low and Hummingbird losing potential revenue.
I don’t understand why is there a chance for the credit limits to be out of date. Could you please explain sir ?
Customers might be doing well so are ordering more and the credit limit could be increased. If they are not doing well, it might be wise to reduce limits.