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Questions and Answers
Which payment method requires the buyer to pay the seller before the goods are shipped?
Which payment method requires the buyer to pay the seller before the goods are shipped?
- Open Account Terms
- Letter of Credit
- Cash in Advance (correct)
- Documentary Collection
Which payment method provides a guarantee of payment from the buyer's bank to the seller?
Which payment method provides a guarantee of payment from the buyer's bank to the seller?
- Trade Finance
- Letter of Credit (correct)
- Open Account Terms
- Consignment
Which payment method involves the buyer receiving the goods before making payment to the seller?
Which payment method involves the buyer receiving the goods before making payment to the seller?
- Documentary Collection
- Trade Finance
- Open Account Terms (correct)
- Cash in Advance
Which payment method requires the involvement of a bank to facilitate the transfer of funds?
Which payment method requires the involvement of a bank to facilitate the transfer of funds?
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Which payment method carries the risk of cancellations and non-receipt of payment?
Which payment method carries the risk of cancellations and non-receipt of payment?
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Study Notes
Payment Methods
- Prepayment: The buyer pays the seller before the goods are shipped.
- Letter of Credit: Provides a guarantee of payment from the buyer's bank to the seller.
- Open Account: The buyer receives the goods before making payment to the seller.
- Bank Transfer: Involves the involvement of a bank to facilitate the transfer of funds.
- Open Account: Carries the risk of cancellations and non-receipt of payment.
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