CFA Practice Question

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CFA Practice Question

When credit is granted to a company by its suppliers and employees, the balance sheet classification is called ______.
A. short-term debt
B. current portion of long-term debt
C. operating and trade liabilities
Explanation: Operating and trade liabilities, and advances from customers, are consequences of operating activities.

User Contributed Comments 3

User Comment
schweitzdm When would an employee grant credit to the company they work for?
janis36 By allowing the company to pay salary for previous month on the next month the employee is effectively granting a credit to the company it works for.
lighty0770 when credit is granted by suppliers sounds very very similar to converting AP to a note payable which is generally classified as short-term debt. Is there an LOS this is in or this classification is pulled directly from the material because I would argue A is also correct.
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