Final answer:
The statement is false; not all credit sales exceeding a customer's credit limit are automatically denied, as businesses may have reasons to approve such transactions. Credit cards are essentially short-term loans from the credit card company to the user, who must pay back the amount spent.
Step-by-step explanation:
The assertion that a credit sale should always be denied if it exceeds the customer's credit limit is false. While it's generally a good practice to avoid extending credit beyond a customer's limit to mitigate risk, there may be occasions where a business decides to approve a sale that exceeds the limit due to various reasons, such as maintaining a valuable relationship with a long-term customer or expecting that the customer will pay the amount back promptly.
Credit cards operate as a short-term loan where the credit card company pays the seller immediately, and the card user is obligated to pay back the credit card company, typically at the end of the month. If the user spends more money than available in their account, the transaction may be declined, or the bank may charge an overdraft fee for the excess.
In summary, credit is a trust-based system allowing for the receipt of goods or services before payment, but it does entail creating a debt that must be repaid in the future.