Question

Payment to creditors is a manifestation of cash held for __________________.

• A. Transactionary Motive
• B. Precautionary Motive
• C. Speculative Motive
• D. All of the above

Answer 1

The correct option is A Transactionary Motive

Creditors are the suppliers who providing goods or services to the organization. On a day to day basis, payments need to be done to the customers for smooth operations. Creditors are classifies as current liabilities.

Cash is hold in the business for various motives.

Transactionary motive is one of them. It is the amount held by the business for day to day transactions such as payment of routine expenses or payment of creditors.