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. What is this type of unsecured?

Question

Quizplus · Accepted Answer

This type of unsecured credit is known as trade credit, which is a common arrangement where a supplier sells goods or services to a buyer on credit, with agreed-upon payment terms. In this case, Magna Manufacturing is extending trade credit to Malloy Building Supply Company by invoicing them for the screwdriver sets and specifying the terms of payment.

When Magna Manufacturing Sells Hand Screwdriver Sets to Malloy Building