Future Business Leaders of America (FBLA) Business Law Practice Exam

Who is known as the party that sells goods on credit or lends money?

1. Debtor

2. Investor

3. Creditor

4. Borrower

The correct answer is: Creditor

The party that sells goods on credit or lends money is known as the creditor. This financial term is used to describe an individual or organization that extends credit to another party, allowing them to purchase goods or services with the understanding that payment will be made at a later date or through a loan. Creditors play a vital role in the financial system, as they provide the necessary funds or goods that borrowers need to facilitate transactions and meet their financial obligations. In this context, the creditor has the expectation of receiving payment or repayment interest, which distinguishes them from other parties such as debtors, who owe money or goods, and borrowers, who are specifically individuals or entities that take on debt from creditors. Investors, although they may provide capital, typically do so in the context of seeking returns on their investments, rather than directly lending or selling goods on credit. Thus, identifying the creditor as the party involved in these transactions is essential for understanding the dynamics of credit and lending in business law.