Which of the following credit agreements provides the least protection to the seller?
A) Banker's acceptance
B) Conditional sale
C) Open account
D) Commercial draft

Question

Quizplus · Accepted Answer

An open account credit agreement is the least protective for the seller because it is a simple agreement between the buyer and seller with no third-party involvement or collateral requirements. The seller is essentially extending credit to the buyer based on trust and past transactions. In comparison, a banker's acceptance, conditional sale, and commercial draft all involve more formalized agreements and provide more protections for the seller.

Which of the Following Credit Agreements Provides the Least Protection