Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is credit in terms of business and finance?

1. Cash payment for goods

2. A method of borrowing money

3. A means of obtaining goods or services now, with a promise to repay later

4. A financial instrument for investing

The correct answer is: A means of obtaining goods or services now, with a promise to repay later

In business and finance, credit refers to the ability to obtain goods or services upfront with the promise to pay for them at a later date. This concept underpins much of modern commerce, allowing consumers and businesses to manage cash flow and make purchases without needing immediate funds. By allowing a deferred payment, credit facilitates transactions that might not occur otherwise, enabling more robust economic activity. The other options describe different financial activities but do not encapsulate the essence of credit. Cash payments represent a completed transaction, while borrowing money implies taking on a loan rather than the broader concept of credit, which encompasses various forms of deferred payment agreements. Lastly, a financial instrument for investing describes tools used to grow wealth, rather than the mechanism of obtaining goods and services based on future payments. Thus, the selected answer accurately captures the fundamental nature of credit in financial transactions.