Which two of the following are benefits of trade credit?

Question

Quizplus · Accepted Answer

Trade credit is a form of credit that is extended by one business to another for the purchase of goods or services. The benefits of trade credit are that it is convenient and cheap as the buyer does not have to pay immediately and can delay payment up to a maximum period of 90 to 120 days. Also, trade credit is available to companies of any size, making it a useful source of financing for small and start-up businesses. However, the bargaining strength usually lies with the supplier as they may offer less credit or demand quicker payment if the buyer has a poor credit rating. Therefore, option C is not a benefit of trade credit. Option A is also incorrect as the cost of trade credit depends on the terms negotiated between the buyer and seller, and it may not always be less expensive than an overdraft.

Which Two of the Following Are Benefits of Trade Credit