Which of the Following Methods of Financing Would Be Used

question 71

Multiple Choice

Which of the following methods of financing would be used if the exporting and importing parties had a strong, long-standing relationship?

• A)documentary credit (letter of credit)
• B)documentary collection
• C)cash in advance
• D)sales on open account
• E)bank draft

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.

Notes Receivable

Notes receivable are written promises for amounts to be received, typically detailing the interest rate and when the principal and interest payments are due.

Claims

Demands for payments or property ownership typically made through legal or financial processes by creditors or insurers.

Subsidiary Ledger

A detailed ledger that contains the individual accounts related to a specific main account, facilitating detailed tracking and reconciliation.