What Does a Trade-Credit Effectively Amount To

question 36

Multiple Choice

What does a trade-credit effectively amount to?

• A) Higher accounts payable.
• B) Higher trust among companies in the same industry.
• C) A loan to the entrepreneur's working capital.
• D) Debt swaps.
• E) None of the above

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Definitions:

Account Payable

Short-term financial obligations or debts a company owes to its creditors for goods and services received.

Cash Purchase

A transaction where goods or services are paid for with cash at the time of purchase.

Credit Purchase

A transaction in which goods or services are acquired with the agreement that payment will be made at a later date.

Expense Transactions

Financial transactions that represent the costs incurred by a business in the course of its operations.