Question

Why do companies grant credit? source of information to be obtained before granting credit of a party?

Answer 1

Example :

ABC ltd. wants to buy good from XYZ ltd. for 10,00,000. 10,00,000 is a huge amount to be paid right away and will harm the daily sales and income of the company. Hence XYZ will : 1. Check their market standing. 2. Their income statement 3. Credit worthiness. If the company checks out the following XYZ ltd will grant credit to them.

Answer 2

ANSWER

______________________________________

Granting Credit :- Commercial banks lend money in the following ways :-

______________________________________

1. Loans and advances :- A specified amount is granted for a specified time period. The Marwar Mein withdraw the entire amount in the lumpsum or in installments.

______________________________________

2. Cash credit :- Under this arrangement the bank allows the borrower to borrow up to a specified limit. The amount is credited to the account of the customer. Cash credit is usually granted on a bond order some other security.

______________________________________

3. Discounting of Bils :- Banks make payment against the bills before the date of maturity. In banks charge some Commission for the service.

______________________________________

#answerwithquality

#BAL

______________________________________