What is a deposit in the sale of goods?

• A. Money that is part of the purchase price prepaid by the buyer as security in contracts for the sale of goods.
• B. A refund of the purchase after delivery.
• C. A fee charged for extended warranty.
• D. A tax assessed at sale.

Answer: (A)

A deposit is money paid in advance by the buyer that counts toward the total purchase price and serves as security for the seller in a sale of goods. It shows the buyer’s commitment and helps lock in the agreement; the amount is typically applied to the final amount due when the sale completes. The deposit can be refundable or nonrefundable depending on the contract terms and whether the buyer fulfills their obligations, but it represents part of the price, not a separate charge. It is not a refund after delivery, not a fee for a warranty, and not a tax.