Under the Terms of a Sight Draft, the Buyer's Bank

question 28

Multiple Choice

Under the terms of a sight draft, the buyer's bank:

• A) is instructed to make immediate payment.
• B) treats the invoice like a postdated check.
• C) forwards the acceptance to the seller until due.
• D)treats the purchase as a conditional sale.

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Definitions:

Net Income

The amount of profit left after all operating expenses, taxes, and interest are deducted from total revenue.

Variable Cost

Expenses that are directly linked to the scale of production activity.

Fixed Cost

Costs that do not change with the level of output or sales in the short term, such as rent, salaries, and insurance.

Depreciation Expense

The portion of the total cost of a tangible asset that is charged as an expense in a reporting period, due to its reduction in useful life.