Explain the use of Letters of Credit (LC).
What will be an ideal response?
An LC is a financial instrument that is purchased at a bank. The bank LC guarantees payment of an obligation at a future point in time. The bank charges a commitment fee to the party who wishes to have the bank’s guarantee.
Since the bank guarantees payment, the person (or entity) holding the obligation does not have to rely on the credit worthiness of the person (or entity) who owes the obligation.
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Bob, a merchant, makes an offer to Linda, another merchant, to buy 1,000 of her widgets in a signed letter containing all necessary terms of the offer. The letter states that Bob will keep the offer open for three weeks from the day the offeree receives it. One week later, Bob writes another letter to Linda attempting to revoke his offer. Linda writes a letter to Bob accepting Bob's original offer before she receives his revocation. Which of the following statements is true of this situation?
A. Promissory estoppel prevents the formation of a contract in this situation. B. Bob's revocation is effective and no contract is created. C. Linda's acceptance is effective and a contract is created. D. The offer cannot be revoked since it is an option offer.
Separation of duties relates to a control activity in the accounting system
Indicate whether the statement is true or false
Bachrodt Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing$21,600Supervising$3,700Other$10,700Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below MHs (Processing)Batches (Supervising)Product Y73,700400Product V06,300600Total10,0001,000Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. Product Y7Product V0?Sales
(total)$102,200$78,900?Direct materials (total)$40,800$39,100?Direct labor (total)$47,200$22,300?What is the product margin for Product Y7 under activity-based costing? A. $6,208 B. $14,200 C. $4,728 D. -$3,800
Rudeness toward customers is sometimes a form of hostility because rudeness
A) often stems from anger. B) is usually triggered by anger from customers. C) usually takes the form of teasing the customer. D) is displayed primarily by sales associates with a personality disorder.