The Purple Vase Flower Store bought some shipping materials, received

QUESTION

The Purple Vase Flower Store bought some shipping materials, received a bill from the supplier, and then paid the bill within 90 days. Which type of financing has Purple Vase utilized?

A) long-term financing
B) debt financing
C) equity financing
D) trade credit
E) commercial paper

ANSWER

Answer: D
Explanation: D) An important source of short-term credit for most firms, trade credit is short-term financing by which a firm buys a product, receives a bill (an invoice) from the supplier, then pays it later, usually in 30 to 90 days.