A sight draft that arises when credit is extended by a seller to a buyer with the sale of goods is known as a ________.
A)check
B)time draft
C)trade acceptance
D)demand draft

Question

Quizplus · Accepted Answer

A trade acceptance is a type of sight draft that arises from a credit transaction between a seller and a buyer. The seller extends credit to the buyer by allowing them to delay payment until a later date, and in exchange the buyer agrees to sign a written agreement (the trade acceptance) to pay the seller on a specified date. This represents a legal obligation on the part of the buyer to pay, and the trade acceptance can be used as a negotiable instrument for the seller to secure financing or funding from a bank or other party.

A Sight Draft That Arises When Credit Is Extended by a Seller