Which term refers to the practice of buying goods now and paying later?

Study for the Bachelor of Business and Economics (BBE) Entrance test. Focus on Math with flashcards and multiple choice questions, each accompanied by hints and explanations. Prepare effectively for your exam!

Multiple Choice

Which term refers to the practice of buying goods now and paying later?

Explanation:
Trade credit refers to the practice of buying goods now and paying later. It’s a short-term financing arrangement where a supplier lets the buyer take the products or services immediately and settle the invoice after a set period, helping with cash flow and inventory management. The amount owed becomes accounts payable for the buyer, usually interest-free if paid by the due date, with penalties or interest if payments miss terms. Other terms don’t fit this idea: litigation is legal action, elderly describes an age group, and conviction refers to a firm belief or a criminal verdict.

Trade credit refers to the practice of buying goods now and paying later. It’s a short-term financing arrangement where a supplier lets the buyer take the products or services immediately and settle the invoice after a set period, helping with cash flow and inventory management. The amount owed becomes accounts payable for the buyer, usually interest-free if paid by the due date, with penalties or interest if payments miss terms.

Other terms don’t fit this idea: litigation is legal action, elderly describes an age group, and conviction refers to a firm belief or a criminal verdict.

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