What is a common result of bad debt?

• A. Increased customer satisfaction
• B. Force charges
• C. Higher rental prices
• D. Decreased insurance rates

Answer: (B)

The presence of bad debt typically leads to force charges, which are additional costs imposed on accounts that are overdue or delinquent. When businesses are unable to collect payments from customers, they face cash flow challenges. To mitigate the financial impact of these unpaid debts, companies may impose force charges as a way to recover some of the lost revenue or to encourage timely payments.

In contrast, options like increased customer satisfaction and decreased insurance rates do not logically follow from a situation involving bad debt. Bad debt usually leads to financial strain on the business, which can result in decreased customer satisfaction if the company struggles to provide services or products effectively. Higher rental prices are also not a direct consequence of bad debt; they are influenced by market conditions rather than the financial health of a business affected by unpaid debts. Therefore, option B stands out as the most accurate outcome related to bad debt.