To buy goods on credit means to:

• A. Lease goods for a specific period
• B. Pay for goods immediately with cash
• C. Receive goods as a donation
• D. Purchase goods now and pay for them at a later date

Answer: (D)

Verified step by step guidance

1. Understand the concept of buying goods on credit: This refers to a transaction where a buyer acquires goods or services but defers payment to a later date, typically under agreed terms.
2. Recognize the difference between buying on credit and other methods: Buying on credit is distinct from paying immediately with cash, leasing goods, or receiving goods as a donation.
3. Identify the accounting implications: When goods are purchased on credit, the buyer records a liability (Accounts Payable) in their financial statements, representing the obligation to pay the supplier.
4. Consider the terms of credit: Credit purchases often come with specific payment terms, such as due dates or discounts for early payment, which should be carefully reviewed and adhered to.
5. Understand the importance of tracking: Properly recording and managing credit purchases is crucial for maintaining accurate financial records and ensuring timely payment to suppliers.