When a Confirmed Letter of Credit Is Used, the Exporting

question 65

Multiple Choice

When a confirmed letter of credit is used, the exporting firm gains because

• A) the government in effect subsidizes shipping costs.
• B) the time involved in shipping is generally reduced.
• C) the firm can sell against the promise of a local bank rather than a firm.
• D) the exporting firm is considered of higher risk.

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Definitions:

Total Liabilities

The aggregate of all debts and financial obligations a company owes to outside parties.

Adjusting Journal Entries

Entries made in accounting records at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Unearned Revenue

Income received by a business for goods or services yet to be provided, recorded as a liability on the balance sheet.

Fees Earned

Revenue generated from services provided or work completed.