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What is trade credit? Briefly describe some of the possible terms for trade credit.

What is trade credit? Briefly describe some of the possible terms for trade credit.
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Answer #1

Trade credit refers to credit received from suppliers for payments due to them or credit given to customers for amounts receivable. The terms of trade credit are:

1: Period of credit offered: this refers to the maximum period within which the amount needs to be paid off.

2: discount period: this refers to the period within which discount will be received if the payments are made.

3: discount rate: this refers to the rate of discount applicable if payments are made within the discount period.

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