Hatfield Manufacturing Wants to Import an Important Machine from Sweden

question 31

Multiple Choice

Hatfield Manufacturing wants to import an important machine from Sweden.However,the company's head of manufacturing is reluctant to spend the time required to provide the documentation required to obtain a letter of credit that the Swedish exporter insists on.You are the company's CFO.Which of the following would you use as an advantage of a letter of credit to convince the head of manufacturing?

• A)The importer does not have to pay for the merchandise until the documents have arrived.
• B)Obtaining pre-export financing becomes easier.
• C)It helps the importer to get goods for a lower price.
• D)It results in lower shipping costs.
• E)The importer does not have to pay the third party a fee for facilitating the transaction.

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Definitions:

Collectibility

The likelihood or ability of a company to collect its accounts receivable from customers.

Sales Price

The amount of money for which a product or service is sold in the market.

Revenue In Full

The total amount of income generated by the sale of goods or services before any deductions are made.

Percentage-Of-Completion

An accounting method that recognizes revenues and expenses in proportion to the completion of a contracted work or project.