A Contract Written by a Bank to Guarantee That the Bank

question 41

Multiple Choice

A contract written by a bank to guarantee that the bank will pay the exporter the amount of money owed by the importer is called a:

• A) Letter of credit
• B) Export contract
• C) Import contract
• D) Contract guarantee

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more relevant comparison of actual to budgeted performance.

Total Variable Cost

The sum of all variable costs (costs that change with production volume) involved in producing a specific level of output.

Activity Declines

A reduction in the level of operations, production, or business activities.

Activity Variance

measures the difference between the actual costs incurred and the budgeted costs based on the actual level of activity.