Asked by Ashley Hinton on Jun 01, 2024
Verified
Trade credit is implicitly costless only:
A) during the entire net period.
B) during the prompt payment discount period.
C) between the first and last days of the net period.
D) at no time.
Trade Credit
A type of commercial financing where a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.
Net Period
The time period within which a net payment is due after any discounts are applied.
- Comprehend the reasons for and mechanisms behind the provision of trade credit by firms.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
B
Explanation :
Trade credit is implicitly costless only during the prompt payment discount period, as this is the only time period where the supplier is offering a discount for prompt payment. Once the discount period has passed, the supplier may charge interest on the outstanding balance, making the trade credit no longer costless.
Learning Objectives
- Comprehend the reasons for and mechanisms behind the provision of trade credit by firms.