Which of the Following Statements Is Correct About Banker's Acceptances

question 71

Multiple Choice

Which of the following statements is correct about banker's acceptances?

• A) They are equivalent to a sight draft.
• B) They represent the norm for installment sales.
• C) The bank guarantees payment of the invoice.
• D) The bank retains title to the merchandise.

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Definitions:

Controllable Variance

Controllable Variance is the difference between actual spending and budgeted amounts that management could control or influence directly.

Variable Overhead

Costs that vary with production output, such as utilities or raw materials, but are not directly tied to a specific unit of production.

Operating Results

The financial outcomes achieved from a company's core business operations.

Variable Factory Overhead

Costs of production that fluctuate with the level of output, including utilities and materials not directly tied to a product's manufacture.