Practice Test Geeks(CCP) Certified Credit Professional Practice Test
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Trade Credit Terms & DSO Flashcards

7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Trade Credit Terms & DSO flashcards as text

  1. Which of the following changes would most directly reduce DSO without changing credit terms?

    Answer: Implementing automated invoice delivery and follow-up

    Automated invoicing and follow-up accelerates customer awareness and reduces processing delays, shortening the collection cycle.

  2. Under 'advance dating' terms, the invoice date is set in the future. The primary purpose is to:

    Answer: Allow the buyer extra time to sell goods before payment is due

    Advance dating pushes the invoice start date forward, effectively giving the buyer more time to sell inventory before the payment clock begins.

  3. A DSO of 45 days against net 30 terms produces what is called:

    Answer: Days delinquent

    Days delinquent (or delinquency DSO) is the portion of actual DSO that exceeds the contractual net terms.

  4. A credit professional reviewing an aging report sees that 40% of AR is over 60 days past due. This most directly suggests:

    Answer: A significant collection problem or deteriorating customer quality

    A high percentage of AR past 60 days signals either chronic slow payers or customers experiencing financial difficulty.

  5. Which term refers to a credit arrangement where the seller's terms reset at the beginning of each calendar month regardless of invoice date?

    Answer: Prox (proximo)

    Proximo (prox) terms set the due date on a specific day of the month following the invoice, effectively resetting each calendar month.

  6. When calculating DSO using the 'average daily sales' method, which figure is typically used as the denominator?

    Answer: Annual credit sales divided by 365

    DSO = AR ÷ (Annual Credit Sales ÷ 365); only credit sales are used because DSO measures collection of credit-based receivables.

  7. A company switches from net 30 to 2/10 net 30 terms and 60% of customers take the discount. What is the MOST LIKELY immediate effect on DSO?

    Answer: DSO decreases because 60% of customers now pay on day 10

    When 60% of customers pay on day 10 instead of day 30, the weighted average collection period falls, reducing DSO.