The most common form of secured credit is: A) accounts receivable financing

Finance Dec 18, 2020

The most common form of secured credit is:

A) accounts receivable financing.

B) inventory financing.

C) floor planning.

D) discounted installment contracts.

Expert Solution

The answer is A) accounts receivable financing

Accounts receivable financing is financing that allows companies to receive financing that is secured by a part of their accounts receivable.

Explanation of Alternate Options

Inventory financing is used to purchase inventory that will not be sold right away. The inventory serves as collateral. Inventory financing is a type of secured credit, but it is not the most common due to the risk of losing product.
Floor planning is a type of financing, normally used in retail, used to purchase display items.
Discounted installment contracts are agreements where the buyer promises to pay in installments.

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