SOFA-CFE · Question #291
The price for granting extended payment terms is called:
The correct answer is C. Finance charges. Finance charges (C) is the standard term for the cost imposed when a buyer is granted extended payment terms - it's essentially the price of borrowing time to pay, compensating the seller for delayed cash flow. Sponsorship charges (A) relate to funding or backing…
Question
The price for granting extended payment terms is called:
Options
- ASponsorship charges
- BEconomics charges
- CFinance charges
- DBankroll charges
How the community answered
(26 responses)- A8% (2)
- B19% (5)
- C69% (18)
- D4% (1)
Explanation
Finance charges (C) is the standard term for the cost imposed when a buyer is granted extended payment terms - it's essentially the price of borrowing time to pay, compensating the seller for delayed cash flow. Sponsorship charges (A) relate to funding or backing events/activities and have no connection to payment terms. Economics charges (B) is not a recognized financial term at all. Bankroll charges (D) is informal slang for funding and is not an accepted business or accounting term.
Memory tip: Think of a credit card - when you don't pay immediately, you incur a finance charge. Extended payment terms work the same way: you're financing the purchase over time, so the cost carries the same name.
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