PRC-3 · Chapter 4 · Question 28 of 65
A supermarket receives weekly shipments of fresh produce and has an agreement with the farmers to pay for the deliveries 30 days after they arrive. What type of short-term finance is this?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Trade credit
Explanation
Trade credit is a short-term financing arrangement where suppliers allow businesses to delay payment for goods and services they have already received.
More Sources of Business Finance MCQs
- Q30A small business sets up an arrangement with its bank allowing it to withdraw up to Rs. 500,000 more than it actually has in its current…
- Q31A successful private software firm wants to expand globally and decides to sell shares to the general public on the stock market for the…
- Q32At the end of a profitable year, a company's board decides not to pay any dividends and instead uses all the profits to buy new machinery…
- Q33To finance a new bridge, a company issues long-term certificates to public investors, promising to pay them 8% interest annually and…
- Q34When a firm is choosing between issuing new shares or taking a bank loan, what is a key financial advantage of choosing the bank loan?