Question

When a seller allows a buyer thirty to sixty days to pay for a purchase, the sales arrangement is called a. a promissory note. b. equity financing. c. trade credit. d. a bank loan. e. None of these answers is correct.

Answer 1

The sales arrangement when a seller allows a buyer thirty to sixty days to pay for a purchase is known as Trade credit

A trade credit is an arrangement that exists between buyers and sellers with respect to exchange of goods and services.

In trade credit, the supplier allows the buyer purchase on credit and pay later usually between 30, 60 or 90 days.

Hence, trade credit is where a seller allows a buyer thirty to sixty days to pay for a purchase.

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