Which Statement Concerning Trade Credit Is Not True

question 48

Multiple Choice

Which statement concerning trade credit is not true?

• A) Credit can be a more convenient method of paying for goods than cash.
• B) Trade credit is an important source of finance for most businesses.
• C) Trade credit is generally regarded as a 'free' source of finance.
• D) A discount of 1% offered for prompt payment of amounts owning to creditors is hardly worth taking.

---

Definitions:

Income from Operations

The profit generated from a company's regular business operations, excluding any extraordinary items.

Estimated Returns Inventory

Inventory that is reserved or set aside by a company, based on historical data, to account for future product returns from customers.

Physical Inventory

The process of counting the actual items in stock to verify records and ensure accuracy in inventory levels.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate revenue.