Question : Which of the following represents an external source of finance?
Option 1: Retained earnings
Option 2: Trade credit
Option 3: Issue of bonus shares
Option 4: Sale of fixed assets
Answer (1)
23rd Jan, 2024
Correct Answer:
Trade credit
Solution : The correct answer is (b) Trade credit.
Trade credit represents an external source of finance. It refers to the credit extended by suppliers or vendors to a company for the purchase of goods or services. When a company receives trade credit, it essentially obtains goods or services on credit, deferring the payment to a later date.
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