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Importing and Exporting M7: Methods of Payment 

Total questions: 12

Worksheet time: 6mins

Name
Class
Date
1.

Which payment method involves the importer paying only after the goods are sold to the end-user?

a)

Open Account

b)

Consignment Sales

c)

Documentary Collection

d)

Cash in Advance

2.

Which payment method is considered the riskiest and most time-consuming for the exporter?

a)

Open Account

b)

Cash in Advance

c)

Documentary Collection

d)

Consignment Sales

3.

In which payment method does the title to the products often move from the seller to the buyer prior to payment?

a)

Consignment Sales

b)

Open Account

c)

Documentary Collection

d)

Documentary Letter of Credit

4.

Which payment method provides no protection to the seller if they are not paid?

a)

Consignment Sales

b)

Open Account

c)

Documentary Collection

d)

Cash in Advance

5.

In which payment method is a negotiable instrument confirming the importer's legal commitment to pay not required?

a)

Documentary Collection

b)

Consignment Sales

c)

Open Account

d)

Documentary Letter of Credit

6.

Which payment method involves the exchange of documents through banks to settle the sale transaction?

a)

Open Account

b)

Consignment Sales

c)

Documentary Collection

d)

Cash in Advance

7.

In a Documentary Collection, the documents are delivered to the buyer after payment has been made or after the buyer has accepted a bill of exchange. What is this bill of exchange called?

a)

Letter of Credit

b)

Documents against Payment

c)

Documents against Acceptance

d)

Cash on Delivery

8.

Which payment method is governed by the Uniform Customs and Practice for Documentary Credits (UCPDC)?

a)

Open Account

b)

Documentary Letter of Credit

c)

Cash in Advance

d)

Consignment Sales

9.

What is the role of the bank in a Documentary Letter of Credit?

a)

Inspect the goods before payment

b)

Act as an intermediary and deal only in documentation

c)

Provide a guarantee for the quality of goods

d)

Offer a loan to the importer

10.

In which payment method does the importer give payment in advance for the goods before they are shipped?

a)

Consignment Sales

b)

Open Account

c)

Documentary Collection

d)

Cash in Advance

11.

Which method of payment is less expensive because it involves direct communication between importers and exporters without the involvement of a commercial bank?

a)

Documentary Letter of Credit

b)

Open Account

c)

Cash in Advance

d)

Documentary Collection

12.

Which payment method is typically used when the importer's credit status is unsatisfactory or the country risks are high?

a)

Documentary Letter of Credit

b)

Consignment Sales

c)

Open Account

d)

Cash in Advance