Question

Stone Creek Farm sells a special type of hay to horse owners. If the farm allows its customers to have hay delivered and then be billed at a later date, it would be using which type of account?.

A. Cash on delivery (COD)
B. Open account
C. Advance payment
D. Escrow account

Answer 1

The correct answer is B. Open account.

Step-by-step explanation:

The correct answer is B. Open account.

If Stone Creek Farm allows its customers to have hay delivered and billed at a later date, it is using an open account. An open account is a type of account where the customer is allowed to make purchases and then pay for them at a later date. This is commonly used in business-to-business transactions and is a way for businesses to extend credit to their customers.

With an open account, the customer does not have to pay cash on delivery (A) or make an advance payment (C). An escrow account (D) is a separate type of account where a third party holds funds until a transaction is completed.