Fact Pattern 22-B1 (Questions B18-B20 Apply)

question 6

Multiple Choice

Fact Pattern 22-B1 (Questions B18-B20 apply)
Economy Bank issues a letter of credit in favor of Finish & Refining Company,a U.S.firm,to facilitate an international sales contract to buy resources from Global Mining,Ltd.,a British company.
-Refer to Fact Pattern 22-B1.Economy Bank is bound to

• A)make sure that the parties perform the contract.
• B)verify with Finish & Refining that the transaction has been completed.
• C)make payment when Global Mining presents the proper documents.
• D)pay Global Mining whenever it asks to be paid.

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Definitions:

Current Liabilities

Obligations expected to require cash in less than one year, usually payables and accruals.

Temporary Working Capital

Additional working capital needed to support the fluctuating levels of business activity.

Cyclical Nature

Describes a pattern that repeats in cycles, often used in economics to describe the fluctuations in the economy over periods of expansions and recessions.

Seasonal

Pertaining to or occurring during a particular season of the year, often implying changes in business activities, market demand, or weather patterns that recur annually.