Trade credit is an example of which of the following sources of financing?
A) spontaneous
B) temporary
C) permanent
D) discretionary

Question

Quizplus · Accepted Answer

Trade credit is a type of spontaneous financing, which refers to the funding that arises naturally from the company's operations, such as accounts payable or accrued expenses. It is a form of financing that a firm receives when it buys goods or services on credit from its suppliers and pays for them later. Therefore, trade credit is not a permanent or discretionary source of financing but a short-term and spontaneous one, linked to the purchase and sale of goods and services between firms.

Trade Credit Is an Example of Which of the Following