Firms generally make purchases from other firms on credit and they record the debt as an account payable. This payable is also known as trade credit, which is defined as the debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by the buyer. Trade credit has a portion that is if the payment occurs during the discount period. If the firm does not take the discount then the trade credit is Firms generally make purchases from other firms on credit and they record the debt as an account payable. This payable is also known as trade credit, which is defined as the debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by the buyer. Trade credit has a portion that is if the payment occurs during the discount period. If the firm does not take the discount then the trade credit is