For an Importer,which of the Following Is a Disadvantage of Using

question 112

Multiple Choice

For an importer,which of the following is a disadvantage of using a letter of credit for international transactions?

• A)It results in the importer losing control over the process of trading.
• B)It reduces the exporter's level of trust in the importer.
• C)It reduces the importer's ability to borrow funds for other purposes.
• D)It requires the importer to repay the loan even before the merchandise is sold.
• E)It is not issued at the importer's request.

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Definitions:

Straight Line Amortization

A method of systematically reducing the carrying amount of an intangible asset over its useful life in equal installments.

Equity Method

An accounting technique used by firms to assess the profits earned through their investment in other companies, by recording such investments at cost and periodically adjusting to reflect the share in profits or losses.

Impairment Loss

A financial accounting concept that represents the reduction in the recoverable amount of an asset below its carrying amount.

Ownership Interest

The proportion of shares or rights in a company held by an investor, indicating the level of control and financial stake.