When Magna Manufacturing sells hand screwdriver sets to Malloy Building Supply Company,Magna bills the tool manufacturer for the screwdriver purchase with terms of payment,which specify when the account is due.This type of unsecured loan is known as which of the following?
A) trade credit
B) borrower's credit
C) product credit
D) revolving credit

Question

Quizplus · Accepted Answer

The situation described in the scenario is an example of trade credit. Trade credit is a type of credit that is extended by one business to another business for the purchase of goods or services. It is a common form of short-term financing and is often used in business-to-business transactions. The terms of payment and the due date are specified in the agreement between the two parties.

When Magna Manufacturing Sells Hand Screwdriver Sets to Malloy Building