Final answer:
A company extending credit to customers typically requires payment after delivery, which means that the customer agrees to pay for the goods at a future date, essentially going into debt.
option c is the correct
Step-by-step explanation:
When a company extends credit to customers and other companies, it requires payment of the goods after delivery. Credit is a financial agreement where a buyer receives goods or services before payment, with the trust and understanding that they will pay for these goods or services in the future.
This form of transaction therefore suggests that the buyer will incur a debt.
It's important for businesses to manage their credit terms carefully.
Extending credit can help a business grow by allowing customers to purchase more goods or services than they could with cash on hand.
However, it also comes with the risk of customers failing to make payments on time, which could impact the company's cash flow. Therefore, companies have credit policies to ensure they manage this risk effectively.