What characterizes a credit transaction?

A credit transaction is characterized by the agreement to pay for goods or services at a later date, meaning the payment is deferred. This arrangement allows a buyer to receive goods or services immediately while agreeing to settle the payment after a specified period. This method of financing can be advantageous for both parties: the seller can increase sales by allowing customers to purchase without immediate cash exchange, and the buyer can manage their cash flow more effectively.

In contrast, options that involve immediate payment, cash-only transactions, or those with no interest charges do not align with the nature of credit transactions. Immediate payment reflects a cash sale, and cash transactions lack the credit element entirely. While credit transactions can potentially have interest charges, the defining feature is the deferment of payment, reinforcing why the selection of deferred payment is correct.