Multiple Choice
Which of the following statements about the Uniform Commercial Code (UCC) is correct?
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1. Introduction to Accounting
Types of Accounting
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Which one of the following is a disadvantage of using credit?
A
It provides convenience in financial transactions.
B
It helps build a positive credit history.
C
It can lead to increased debt if not managed properly.
D
It allows for immediate purchase of goods and services.
Verified step by step guidance1
Understand the concept of credit: Credit allows individuals or businesses to borrow money or access goods and services with the promise to repay later, often with interest.
Identify the advantages of using credit: These include convenience in financial transactions, building a positive credit history, and enabling immediate purchases of goods and services.
Recognize the disadvantages of using credit: The primary disadvantage is that it can lead to increased debt if not managed properly, which can negatively impact financial stability and credit scores.
Analyze the options provided in the question: Compare each statement to determine which one highlights a disadvantage of using credit.
Select the correct answer: Based on the analysis, the statement 'It can lead to increased debt if not managed properly' accurately describes a disadvantage of using credit.
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