An Exporter Demands a Letter of Credit in Order to

question 94

Multiple Choice

An exporter demands a letter of credit in order to

• A)guarantee safe delivery of goods to the importer.
• B)guarantee receipt of payment from the importer upon receipt of the goods.
• C)protect against adverse changes in foreign exchange rates.
• D)protect against adverse changes in international interest rates.
• E)ascertain the creditworthiness of the importer.

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Definitions:

Incurred

Expenses, losses, or liabilities that have been suffered or assumed in the course of conducting business.

Matching Principle

An accounting concept that requires expenses to be recorded in the same period as the revenues that are generated as a result of those expenses.

Expenses

It refers to the outflow of cash or other valuable assets from a person or company to another entity as a result of purchasing goods or services.

Related Revenues

Income that is directly connected to the primary operations or activities of a business.