SuperFit Inc Is a Toronto- Based Distributor of Weight and Exercise

question 41

Multiple Choice

SuperFit Inc is a Toronto- based distributor of weight and exercise equipment from around the world. One of its suppliers is Leko Inc, a manufacturer of high- end barbells and dumbbells, based in Tampere, Finland. Leko is paid for its sales to SuperFit by letter of credit. According to the autonomy principle,

• A) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit only if the bank autonomously confirms that the goods do not conform.
• B) even if SuperFit believes that the goods do not conform to the contract, it cannot prevent payment under the letter of credit.
• C) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit.
• D) if the goods do not conform to the contract, SuperFit can prevent payment under the letter of credit only if the non- confomity has nothing to do with the documents required to be presented under the letter of credit.
• E) none of the above.

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Definitions:

Master Budget

A comprehensive financial planning document that includes all of the organization's financial plans.

Credit Sales

Sales made to customers on credit, allowing them to purchase now and pay later, creating accounts receivable for the company.

Selling Expense

Costs incurred to promote, sell, or distribute a product or service, such as advertising and commission.

Administrative Expense

Costs related to the general administration of a business, including salaries of senior executives, costs of general services, and office supplies among others.