Economics · Short-Term Financing
Consider the following statements regarding specific short-term sources of finance: Statement 1: Trade credit is classified as a spontaneous source of finance because it expands naturally with the volume of a firm's purchases and generally does not involve an explicit interest cost. Statement 2: In a Bank Cash Credit arrangement, interest is specifically charged only on the portion of funds actually utilized by the firm rather than the entire sanctioned limit.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both statements are false.
- 2Both statements are true.✓
- 3Statement 1 is true, but Statement 2 is false.
- 4Statement 1 is false, but Statement 2 is true.
Correct answer
Both statements are true.
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