Asked by Joseph Amberg on Jul 06, 2024
Verified
Which of the following statements is correct?
A) The credit period is the length of time for which a discount can be taken.
B) Trade credit terms are set by the buyer.
C) Trade credit is classified as a liability for the seller.
D) A cash discount is generally offered to slow down payment of invoices.
E) The invoice date is the beginning of the credit period.
Credit Period
The time frame between when a purchase is made and when the payment for that purchase is due, without incurring any interest.
Cash Discount
A reduction in the price of an item for sale, offered by the seller as an incentive for the buyer to pay promptly.
Trade Credit
Short-term financing extended by a seller to a buyer allowing the latter to purchase goods or services and pay for them at a later date.
- Familiarize yourself with the concept of trade credit, its essentiality, and the variations in terms of credit.
Verified Answer
MS
Melvin SaylorJul 06, 2024
Final Answer :
E
Explanation :
The invoice date marks the start of the credit period, which is the time frame that the buyer has to pay the seller for the goods or services purchased. This period can vary depending on the agreement between the buyer and seller.
Learning Objectives
- Familiarize yourself with the concept of trade credit, its essentiality, and the variations in terms of credit.