Course6200/6600 Principlesof Business andFinanceUnit BPrinciples of FinanceEssentialStandard5.00B219%Understand businesscredit and riskmanagement.Objective5.01B212%Understand creditmanagement.EssentialQuestions
What are the main types of credit?
What are some advantages and disadvantages of businessesusing credit?
What main factors are included in calculating cost of credit?
How do creditors determine to whom to grant credit?
What are the commonly used credit documents?
How do credit regulations protect the rights of creditapplicants and users?
How do credit assistance options address problems of creditusers?
6200/6600 Principles of Business and Finance Summer 2010 Page321
I. A.Creditis the use of someone else’s money for a specified period of time.Businesses,the government,and individualsuse creditto buy goods and services.The
maintypes of credit
are:B.Charge accountsC.Credit cardsD.Installment creditII.Consumer loans A.There areadvantages and disadvantagesof businesses using credit
Commonadvantages of businesses
using credit are:2.Establishingfavorable creditrates3.Keepingbusiness separate from personal expenses4.Minimizingrecord-keeping and receipts5.Keepingtrack of what employees are spendingB.Earningrewards1.
using creditare:2.Experiencing theft of customer records/databases3.Overbuying by employeesOverusingcredit