Granting a Foreign Company the Right to Manufacture Your Product

question 175

Multiple Choice

Granting a foreign company the right to manufacture your product or to use your firm's trademark in return for a fee is called:

• A)outsourcing.
• B)a foreign subsidiary.
• C)a joint venture.
• D)licensing.

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Definitions:

Service Charge Expense

Costs incurred by a company for the services provided by another entity, often including bank fees or utilities.

Factoring Receivables

A financial transaction where a business sells its accounts receivable to a third party at a discount in exchange for immediate cash.

Allowance for Doubtful Accounts

A contra asset account on a company’s balance sheet that represents the amount of receivables it does not expect to collect.

Credit Sales

Sales transactions where the customer is allowed to pay at a later date, typically generating accounts receivable.