When credit is granted to another firm this gives rise to a(n):
A) accounts receivable and is called a consumer credit.
B) credit due and is called an installment note.
C) accounts receivable and is called trade credit.
D) trade receivable and is called an installment note.
E) None of these.

Question

Quizplus · Accepted Answer

When credit is granted to another firm, it creates an accounts receivable for the firm granting the credit and is commonly referred to as trade credit. Consumer credit refers to credit granted to individuals rather than businesses, and an installment note refers to a specific type of loan agreement rather than a general term for trade credit. Choice D is incorrect because a trade receivable is another term for an accounts receivable, and choice B is incorrect because it does not accurately describe the transaction.

When Credit Is Granted to Another Firm This Gives Rise