ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Money as a standard of deferred payment means that the standard of pavment is contracted to be made at some future date. This is possible because value of money remains more or less constant and has the merit of general acceptability. This function of money has facilitated borrowing and lending activities.

Detailed explanation-2: -A deferred payment is one that is delayed, either completely or in part, in order to give the person or business making the payment more time to meet their financial obligations. In accounting terms, any merchant allowing customers to set up a deferred payment agreement will be dealing with accrued revenue.

Detailed explanation-3: -The “buy now, pay later” transactions are typical examples of payment deferral.

Detailed explanation-4: -For deferred payment plans, the system processes the credit invoice after the debit invoice has been deposited. For installment payment plans, the system processes the credit invoice once the debit invoice amount deposited is equal to or greater than the credit invoice amount.

Detailed explanation-5: -i) Standard of deferred payments: It means that money acts as a ‘standard’ for making future payments. It has made deferred payments much easier than before.