Which of the Following Is NOT an Advantage of Trade

question 94

Multiple Choice

Which of the following is NOT an advantage of trade credit versus a standard loan?

• A) Trade credit reduces a firm's collection float.
• B) If the buyer defaults, the supplier may be able to seize the inventory as collateral.
• C) The supplier may have more information about the credit quality of the customer than a bank.
• D) Providing financing at below-market rates is an indirect way to lower prices for only certain customers.

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Definitions:

Product Cost

The total cost associated with producing a good, including raw materials, labor, and overhead.

Period Cost

Costs that are not directly tied to the production process and are expensed in the accounting period in which they are incurred.

Insurance Expired

The portion of an insurance premium that has been used up during the policy term, representing a cost for the period.

Administrative Facilities

Facilities utilized for administrative purposes, including offices, meeting rooms, and support areas that help in the management and operation of an organization.