Module B Export And Import Practices Full Test Bank 2e Ball

Module B Export and Import Practices

1) The two major reasons U.S. firms give for not exporting are (1) preoccupation with the vast American market and (2) reluctance to become involved in a new and unknown operation.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

There are many reasons to export. But why do companies not export? Two major reasons are preoccupation with the home market and reluctance to embark on a new and unknown operation.

2) The first step in finding a foreign market for a product is to determine whether a product's pricing is right for that market.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting

The first step in locating foreign markets is to determine whether there is a need for the firm's products.

3) CIBER is an international business research and education program located at U.S. universities.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy

The United States Department of Education provides the Center for International Business and Research (CIBER program) to support education related to international business and trade in 17 universities. The program is buttressed with additional grant programs to support foreign language study, international study, international business research, and undergraduate international studies.

4) A common mistake exporters make is not keeping their focus on the home market, despite what is happening in the export market.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

Of the 12 mistakes most commonly made by new exporters, a common one is neglecting export business when the home market booms. Often companies turn to exporting when business falls off in their home market. When domestic business starts to boom again, they neglect their export trade.

5) Often new exporters think that they won't have to localize their approach, assuming that a marketing technique or distribution system that works in one country will work in another.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

Of the 12 mistakes most commonly made by new exporters, a common one is assuming that a given market technique and product will automatically be successful in all countries. What works in one market may not work in others. Each market has to be treated separately until the company has sufficient knowledge about its export markets to generalize about them.

6) Incoterms are internationally standardized terms that describe the responsibilities of the buyer and seller in international trade.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Accessibility : Keyboard Navigation
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Incoterms are a series of 11 internationally standardized terms that describe the conditions of sale and the responsibilities of the buyer and seller in international trade transactions.

7) The sales agreement should specify as simply as possible the duties of the buyer and the firm.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

In an export sale, the sales agreement needs to specify as simply as possible the duties of both the firm's foreign representative (the buyer) and the firm.

8) Most international customers will pay cash in advance unless the order is for a custom-made product.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Few customers will pay cash in advance unless the order is for a custom-made product.

9) On an open account, the buyer assumes all of the payment risk.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

When a sale is made on open account, the seller assumes all the payment-related risk, so such terms should be offered only to reliable customers. The exporter's capital is tied up until payment has been received.

10) A disadvantage for companies that insist on less risky transactions, such as a letter of credit, is that they may be losing business to competitors who sell on open accounts.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Exporters that insist on less risky payment terms, such as a letter of credit, may find that they are losing business to competitors who do sell on open account.

11) A confirmed letter of credit guarantees payment to the seller under certain conditions.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

A letter of credit (L/C). is a document issued by the buyer's bank in which the bank becomes an intermediary in the sale, promising to pay the seller a specified amount under specified conditions.

12) Export drafts must be paid before the buyer receives shipping documents.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

An export draft is an unconditional order drawn by the seller that instructs the buyer to pay the draft on presentation (sight draft) or at an agreed future date (time draft) and that must be paid before the buyer receives shipping documents.

13) Factoring allows the exporter to be more competitive by selling on open account rather than by a letter-of-credit method.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

Factoring is the sale of an exporter's accounts receivable on ordinary goods, with the balance of the payment due upon delivery or soon after. Factoring permits the exporter to be more competitive by selling on open account rather than by the more costly letter-of-credit method.

14) Free trade zones are areas designated by the government of a country for duty-free entry of imported goods.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The free trade zone (FTZ), an area designated by a government as outside its customs territory, are duty-free areas designed to facilitate trade by reducing the effect of customs restrictions.

15) A shipper's export declaration (SED) is a document required by the Department of Agriculture to control exports and supply export statistics.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

An SED is a U.S. Department of Commerce form used to control export shipments and record export statistics.

16) A straight bill of lading is nonnegotiable.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

An export bill of lading (B/L) is a document issued by the carrier that is a contract for the shipment, a receipt for the goods shipped, and a certificate of ownership. B/Ls are either straight or to order. A straight bill of lading is nonnegotiable. Only the person stipulated in it may obtain the merchandise on arrival. An order bill of lading, however, is negotiable.

17) Fires and hurricanes fall under the marine insurance policy of broad named perils.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Basic named perils include perils of the sea, fires, jettisons, explosions, and hurricanes. Broad named perils include theft, pilferage, nondelivery, breakage, and leakage in addition to the basic perils.

18) Exporting using ocean freight rather than air freight is a much cheaper alternative, particularly when calculated on the basis of total costs.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Newcomers to exporting might assume that ocean freight is a better choice than air freight because ocean freight is so much cheaper. Comparison of total costs of each mode may suggest otherwise. Total cost components that may be lower for air freight include insurance rates, because of much less chance of damage during shipment; packing costs, because the shipment does not need the heavier, more costly export packing, which is usually done by an outside firm; customs duties, when calculated on gross weights; replacement costs for damaged goods, again because of the reduced damage risk; and inventory costs, because rapid delivery by air freight often eliminates the need for expensive warehouses.

19) Customhouse brokers have functions that are the same as those of foreign freight forwarders, but on the export side of the transaction.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

Customhouse brokers have functions parallel to those of foreign freight forwarders, but on the import side of the transaction.

20) The main problem with the Harmonized Tariff Schedule of the United States is that every country uses a different system.

⊚ true
⊚ false

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

All member countries use the same system, so it is possible to describe the product in any language by using the first six digits of the product’s number.

21) What is one reason companies choose not to export?

A) They do not wish to increase their sales.
B) They do not feel a need for exporting.
C) They are preoccupied with the host market.
D) They are reluctant to embark on a new and unknown operation.

Question Details
AACSB : Reflective Thinking
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting

Why do companies not export? Two major reasons are preoccupation with the home market and reluctance to embark on a new and unknown operation.

22) Managers generally mention three areas in which they lack knowledge related to exporting, including identification of foreign markets, export procedures, and

A) identifying international agents.
B) identifying international distributors.
C) payment and financing procedures.
D) hiring a customs broker.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

When managers of non-exporting firms are probed further, they generally mention the following three areas in which they lack knowledge: identification of foreign markets, payment and financing procedures, and export procedures.

23) The government's trade portal where you can get help with most things related to trade is

A) trade.gov.
B) export.gov.
C) trade.com.
D) commerce.gov.

Question Details
AACSB : Reflective Thinking
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy

Export.gov is the U.S. government’s trade portal, where you can find almost everything from the federal government related to trade.

24) Once a firm has determined there is a need for the firm's products in a foreign market, the next step is to

A) request information from the International Trade Administration.
B) choose between exporting or licensing.
C) set up its own export operation.
D) draft the export marketing plan.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

Once the potential exporter has established that there may be a market for the firm’s products, it’s time to draft the export marketing plan.

25) The ITA's Global Markets Unit specialists seek to provide which service to U.S. firms?

A) advocacy for market access
B) monitor foreign country compliance with trade agreements
C) shaping industry-specific trade policies and promotion strategies
D) organizing trade missions and fairs

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

The Global Markets Unit provides U.S. firms with specific country assistance on export promotion and advocacy for market access.

26) Which unit of the International Trade Administration promotes the trade interests of U.S. industries by helping to shape industry-specific trade policies and promotion strategies, including trade missions, fairs, and seminars?

A) Global Markets Unit
B) Industry and Analysis Unit
C) Enforcement and Compliance Unit
D) Small Business Administration

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

The Industry and Analysis Unit promotes the trade interests of U.S. industries by helping to shape industry-specific trade policies and promotion strategies, including trade missions, fairs, and seminars.

27) The Small Business Administration (SBA) provides what kind of assistance?

A) grant programs to support international research
B) education assistance
C) financial assistance
D) coupon redemption service

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

The SBA offers business development and financial assistance through its Office of International Trade to encourage small businesses to export. SBA also has initiated a state-based financial grant program to support state efforts to build the export capacity of its businesses.

28) The Enforcement and Compliance unit of the ITA helps American business by

A) providing advocacy for market access.
B) monitoring foreign country compliance with trade financing.
C) monitoring and enforcing U.S. trade law and agreements.
D) organizing trade missions and fairs.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

The Enforcement and Compliance unit monitors and enforces U.S. trade law and trade agreements. For example, it looks for dumping and subsidies that distort trade and helps U.S. companies that believe their trade problems stem from unfair practices to seek compliance and remedies.

29) Which organization offers a matching service, bringing potential exporters together with business partners in specific markets?

A) Global Markets Unit
B) U.S. Department of Commerce
C) Enforcement and Compliance Unit
D) Small Business Administration

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

Among the Commerce programs are a matching service, bringing together potential exporters with business partners in specific markets, and an acquisitions support program that searches for suitable acquisitions in foreign locations.

30) Which organization provides an acquisition support program that searches for suitable acquisitions in foreign locations?

A) Global Markets Unit
B) U.S Department of Commerce
C) Enforcement and Compliance Unit
D) Small Business Administration

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

Among the Commerce programs are a matching service, bringing together potential exporters with business partners in specific markets, and an acquisitions support program that searches for suitable acquisitions in foreign locations.

31) What private sector organization is active in 91 countries and provides networking opportunities and an online trading system?

A) Global Markets Unit
B) U.S Department of Commerce
C) World Trade Centers Association
D) Small Business Administration

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

In the private sector, the World Trade Centers Association, a membership organization active in 91 countries, provides networking opportunities and an online trading system.

32) Dun & Bradstreet, the Finance, Credit, and International Business Association (FCIB), and the exporter’s bank are all sources of

A) export financing.
B) networking opportunities.
C) credit information.
D) business strategy consulting.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

Credit reporting agencies, such as Dun & Bradstreet, the Finance, Credit, and International Business Association (FCIB), and the exporter’s bank are a source of credit information.

33) Which of these is one of the 12 most common mistakes and pitfalls awaiting new exporters listed in the textbook?

A) failure to develop a domestic marketing plan
B) not treating international distributors on an equal basis with domestic counterparts
C) too much attention on selecting overseas distributors
D) overuse of an export management company

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

The common mistake is failing to treat international distributors on an equal basis with domestic counterparts.

34) If exporting turns out to be unfeasible because of import restrictions or insufficient human or financial resources, but the firm still wants to sell its products overseas, the firm should consider

A) establishing itself domestically first.
B) waiting until the import policies change.
C) pursuing licensing or joint venture agreements.
D) finding a different country to export to.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting

Import restrictions in some countries, insufficient human or financial resources, or a too-limited product line can cause many companies to dismiss international marketing as unfeasible. Yet, many products that compete on a national basis in a home market can be marketed successfully in many markets of the world through licensing or joint-venture arrangements.

35) Incoterms are developed and maintained by the

A) U.S. Chamber of Commerce.
B) International Chamber of Commerce.
C) World Trade Organization.
D) United Nations.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The International Chamber of Commerce created Incoterms.

36) Incoterms are divided into two basic categories:

A) open account and L/C.
B) general and water transportation.
C) ship and ground transport.
D) export and domestic shipments.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Incoterms are divided into two basic categories: general transportation terms and water transportation terms.

37) Incoterms describe three issues that arise in a commercial transaction, including

A) which party collects the payments.
B) which party's jurisdiction is used to resolve conflicts.
C) which party determines the goods to be sent.
D) which party covers the costs.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms
Difficulty : 3 Hard

Incoterms describe the three issues that arise in a commercial transaction: which party does which tasks, which party covers the costs, and which party bears the risk.

38) FOB (free on board) means that

A) the cost and risk transfer to the seller at the ship's rail.
B) the seller pays for carriage to the named place and assumes all risk until the goods are unloaded.
C) the seller pays cost of freight to bring goods to the destination port, but not insurance.
D) the seller loads the goods on board the ship identified by the buyer and clears them for export, and both the cost and the risk then transfer to the buyer.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

FOB (free on board) means the seller loads the goods on board the ship identified by the buyer and clears them for export, and both cost and risk transfer to the buyer at the ship’s rail.

39) The Incoterm for the situation when the seller hands over goods to a carrier at a specified place, where risk then passes is to the buyer, is

A) FCA.
B) DAT.
C) CIF.
D) CFR.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation when the seller hands over goods to a carrier at a specified place, where risk then passes to the buyer is FCA, or "free carrier."

40) The Incoterm for the situation when carriage is paid to a specified destination, the seller pays for carriage, while risk passes to the buyer when the goods are handed to the carrier is

A) FCA.
B) DAT.
C) CIF.
D) CPT.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation when carriage is paid to a specified destination, the seller pays for carriage, while risk passes to the buyer when the goods are handed to the carrier is CPT, or "carriage paid to."

41) What is the Incoterm for the situation when carriage and insurance are paid to a specified destination, while risk passes to the buyer when the goods are handed to the carrier?

A) CIP
B) DAT
C) CIF
D) CPT

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation when carriage and insurance are paid to a specified destination, while risk passes to the buyer when the goods are handed to the carrier is CIP, or "carriage and insurance paid."

42) What is the Incoterm for the situation where the product is delivered at the specified destination, and the seller pays for carriage to the named place and assumes all risk until goods are unloaded?

A) CIP
B) DAT
C) CIF
D) DAP

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation where the product is delivered at the specified destination, and the seller pays for carriage to the named place and assumes all risk until goods are unloaded, is DAP, or "delivered at place."

43) What is the Incoterm for the situation where the product is delivered at the specified destination and the seller pays for carriage to the named place, as well as all duties, taxes, and customs charges?

A) DDP
B) DAT
C) CIF
D) DAP

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation where the product is delivered at the specified destination and the seller pays for carriage to the named place, as well as all duties, taxes, and customs charges, DDP, or "delivered, duty paid."

44) What is the Incoterm for the situation where the seller loads the goods onto the ship and the risk passes to the buyer once they are aboard the ship?

A) CFR.
B) DAT.
C) CIF.
D) FOB.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation where the seller loads the goods onto the ship and the risk passes to the buyer once they are aboard the ship, is FOB, or "free on board."

45) What is the Incoterm for the situation where the seller pays the costs of freight to bring goods to the destination port and the risk passes to the buyer once the goods are loaded aboard the ship?

A) CFR.
B) DAT.
C) CIF.
D) FOB.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm for the situation where the seller pays the costs of freight to bring goods to the destination port and the risk passes to the buyer once the goods are loaded aboard the ship, is CFR, or "cost and freight." This does not include insurance.

46) On pricing, which of the following terms of sale are more convenient for foreign buyers because to establish their cost, they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouse?

A) CFR
B) CIP
C) DAT
D) DAP

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

On pricing, CIF and CFR terms of sale are more convenient for foreign buyers because to establish their cost, they merely have to add the import duties, landing charges, and freight from the port of arrival to their warehouse.

47) Most of what is contained in a sales agreement is the same in the contract for a domestic representative as for an export sale. However, what is one of the two areas requiring special attention in an export sales contract?

A) designation of responsibilities for collection of monies
B) designation for managing promotion of the product
C) designation of responsibilities for patent and trademark registration
D) designation of the deadline and mechanisms for completing the sale

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms
Difficulty : 3 Hard

Most of what is contained in the contract for a domestic representative can also be used in export, but two areas require special attention: the designation of the responsibilities for patent and trademark registration and the designation of the country and state or province whose laws will govern any contractual dispute.

48) Most of what is contained in a sales agreement is the same in the contract for a domestic representative as for an export sale. However, what is one of the two areas requiring special attention in an export sales contract?

A) Designation of the deadline for concluding the agreement and disseminating funds.
B) Designation for managing promotion of the product.
C) Designation of responsibilities for shipping and insurance of the goods while in transit.
D) Designation of the country and state or province whose laws will govern any contractual dispute.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms
Difficulty : 3 Hard

Most of what is contained in the contract for a domestic representative can also be used in export, but two areas require special attention: the designation of the responsibilities for patent and trademark registration and the designation of the country and state or province whose laws will govern any contractual dispute.

49) On a consignment sale, the payment risk is

A) assumed by the buyer.
B) assumed to be equally shared.
C) carried by the seller.
D) covered by insurance.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

In a sale made on consignment, goods are shipped to the buyer, and payment is not made until they have been sold. All the payment risk is assumed by the seller, so such terms should not be offered without making the same extensive investigation of the buyer and country as that recommended for open-account terms.

50) Which action is the most risky for an exporter?

A) open account
B) irrevocable letter of credit
C) bank collection time draft
D) cash in advance

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

When a sale is made on open account, the seller assumes all of the payment-related risk, so such terms should be offered only to reliable customers. The exporter's capital is tied up until payment has been received.

51) The payment terms discussed in the text that exporters can offer to foreign buyers are cash in advance, open account, consignment, letters of credit, and

A) documentary drafts.
B) cash on delivery.
C) long-term financing.
D) barter arrangements.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Among the payment terms exporters can offer to foreign buyers are cash in advance, open account, consignment, letters of credit, and documentary drafts.

52) Which of these actions is the least risky for an exporter?

A) open account
B) irrevocable letter of credit
C) bank collection time draft
D) cash in advance

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Only cash in advance offers more protection to the seller than does a letter of credit, because payment will follow when the bank has received the stipulated documents by a specified time.

53) With which payment mechanism is it the case that once the seller has accepted the credit, the customer cannot alter or cancel it without the seller's consent?

A) irrevocable letter of credit
B) open account
C) consignment
D) bank collection time draft

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

With an irrevocable letter of credit, once the seller has accepted the credit, the customer cannot alter or cancel it without the seller's consent.

54) What is an unconditional order drawn by the seller on the buyer instructing the buyer to pay the amount of the order on presentation?

A) an unconditional letter of credit
B) a time draft
C) a consignment
D) a sight draft

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

An unconditional order drawn by the seller on the buyer instructing the buyer to pay the amount of the order on presentation is a sight draft. There is no guarantee with a documentary draft. An unscrupulous buyer could refuse to pay the draft when presented and then attempt to bargain with the seller for a lower price.

55) In a ________, a correspondent bank in the seller’s country confirms that it will honor the issuing bank’s letter of credit.

A) irrevocable L/C
B) guaranteed L/C
C) standard L/C
D) confirmed L/C

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

This is the definition of a confirmed L/C.

56) When an air carrier presents a bill of lading as proof that the shipment has been made, it is called a(n)

A) way airbill.
B) air waybill.
C) destination bill.
D) bill of delivery.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

When an air carrier presents a bill of lading as proof that the shipment has been made, it is called a(n) air waybill.

57) A simple irrevocable L/C requires several steps to clear payment. Once the exporter and buyer agree on the terms of a sale, that happens next?

A) The buyer arranges for its bank to open a letter of credit that specifies the documents needed for payment.
B) The exporter’s freight forwarder is contacted to make sure that the shipping date can be met.
C) The exporter arranges with the freight forwarder to deliver the goods to the appropriate port or airport.
D) The exporter (or the freight forwarder) presents documents, evidencing full compliance with the letter of credit terms, to the U.S. bank.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The next step is for the buyer to arrange for its bank to open a letter of credit that specifies the documents needed for payment.

58) A confirmed letter of credit and a documentary draft are similar, EXCEPT that

A) a letter of credit is issued by the seller's bank.
B) a documentary draft offers more protection than a letter of credit.
C) a letter of credit specifies no conditions.
D) there is no guarantee of payment with a documentary draft.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Although documentary draft and letter-of-credit terms are similar, there is one important difference. A confirmed letter of credit guarantees payment to the seller if the seller conforms to its requirements. There is no guarantee with a documentary draft.

59) What is the term for the sale of an exporter's accounts receivable on ordinary goods, with the balance of the payment due upon delivery or soon after?

A) forfaiting
B) consignment
C) factoring
D) time draft

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The sale of an exporter's accounts receivable on ordinary goods, with the balance of the payment due upon delivery or soon after, is factoring.

60) What is the term for when the sale of an exporter's accounts receivable on capital goods, commodities, and other high-value goods has the payment due at least 180 days out?

A) forfaiting.
B) consignment.
C) factoring.
D) banker's acceptance.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The sale of an exporter's accounts receivable on capital goods, commodities, and other high-value goods, with the payment due at least 180 days out, is forfaiting.

61) A time draft with a maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank’s obligation is called a(n)

A) short-term draft.
B) banker's acceptance.
C) factored sale.
D) irrevocable letter of credit.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

A time draft with a maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank’s obligation is called a banker's acceptance.

62) More than 90 percent of the Ex-Im Bank's transactions in 2016 supported

A) domestic corporations.
B) start-up firms.
C) U.S. small businesses.
D) foreign conglomerates.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

More than 90 percent of the bank’s transactions in 2016 supported U.S. small businesses.

63) Which is the principal government agency responsible for aiding the export of American goods and services through a variety of loan, guarantee, and insurance programs?

A) U.S. Export-Import Bank (Ex-Im Bank)
B) Overseas Private Investment Corporation (OPIC)
C) Foreign Sales Corporation (FSC)
D) Major League Baseball (MLB)

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The U.S. Export-Import Bank (Ex-Im Bank) is the principal government agency that provides loans, guarantees, and insurance programs to support U.S. exporters. Ex-Im Bank provides direct loans to foreign buyers of U.S. exports and intermediary loans to responsible parties, such as a foreign government lending agency that relends to foreign buyers of capital goods and related services.

64) Company X was concerned about the risks of exporting to a developing country, so it approached the ________ government organization to inquire about insurance against expropriation, currency inconvertibility, and damages from wars or revolutions.

A) U.S. Export-Import Bank (Ex-Im Bank)
B) Federal Trade Commission
C) Foreign Sales Corporation (FSC)
D) Overseas Private Investment Corporation

Question Details
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing
AACSB : Knowledge Application
Bloom's : Apply

The Overseas Private Investment Corporation (OPIC) is a government corporation formed to stimulate private investment in developing countries that offers investors insurance against expropriation, currency inconvertibility, and damages from wars or revolutions.

65) Free ports, transit zones, and export processing zones are examples of

A) free perimeters.
B) free trade zones.
C) customs zones.
D) foreign trade zones.

Question Details
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing
AACSB : Knowledge Application

Foreign trade zones (FTZs) are duty-free areas designed to facilitate trade by reducing the effect of customs restrictions. These areas may be free ports, transit zones, free perimeters, export processing zones, or free trade zones.

66) A ________ is an area designated by a government as outside its customs territory.

A) free trade zone
B) free ports
C) transit zones
D) export processing zones

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The free trade zone (FTZ) is an area designated by a government as outside its customs territory, and is the most common type of foreign trade zone.

67) When manufacturing or assembly is done in FTZs using imported components,

A) no duties need ever be paid if the finished product is exported.
B) duties are paid upon export of the finished product.
C) duties are paid on the individual parts used to make the product.
D) duties are only paid on materials originating from the host country.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

When manufacturing or assembly is done in FTZs using imported components, no duties need ever be paid if the finished product is exported.

68) A rebate on a customs duty is called

A) an excise tax.
B) a tax refund.
C) a customs drawback.
D) a restricted duty.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

Customs drawbacks are rebates on customs duties.

69) Correct documentation is vital to the success of any export shipment, yet error rates reported for export and import documentation hover around

A) 10 to 20 percent.
B) 25 to 40 percent.
C) 50 to 70 percent.
D) 80 to 90 percent.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Correct documentation is vital to the success of any export shipment, yet error rates reported for export and import documentation hover around 50 to 70 percent, largely because they are documents that are prepared by different parties, yet their data need to be consistent.

70) What U.S. Department of Commerce form contains the names and addresses of the shipper and consignee, the U.S. port of exit and foreign port of unloading, a description and value of the goods, and other information?

A) export license
B) bill-of-lading
C) shipper's export declaration
D) carrier's manifest

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

The U.S. Department of Commerce form used to control export shipments and record export statistics is the shipper's export declaration (SED).

71) Collection documents are

A) for debt carried in cash receivables.
B) needed to load and unload transported goods.
C) presented to the buyer for payment.
D) required for customs approval.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

To receive payment, the seller provides the buyer with collection documents that enable the buyer to receive the goods.

72) Which of these is a common type of collection document?

A) export documentation
B) proof of insurance
C) inspection certificates
D) customer certification

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Collection documents vary among countries and customers, but some of the most common are commercial and consular invoices, certificates of origin, and inspection certificates.

73) A document issued by the carrier that is a contract for the shipment, a receipt for the goods shipped, and a certificate of ownership is called a(n)

A) export bill of lading.
B) shipper's export declaration.
C) freight bill.
D) customs bill.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

This is the definition of an export bill of lading. It serves three purposes: (1) it is a contract for carriage between the shipper and the carrier; (2) a receipt from the carrier for the goods shipped; and (3) a certificate of ownership.

74) In the area of shipment risk, ocean vessels assume

A) all the risk for the safety of their cargo.
B) none of the risk for the safety of their cargo, except for negligence.
C) exporters will have bought adequate insurance.
D) marine environments are usually safe.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Unlike domestic carriers, oceangoing steamship companies assume no responsibility for the merchandise they carry unless the loss is caused by their negligence.

75) Basic named perils that marine insurance will cover include

A) perils of the sea, fires, jettisons, and hurricanes.
B) theft and larceny.
C) piracy on the seas.
D) human-error accidents.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Basic named perils include perils of the sea, fires, jettisons, explosions, and hurricanes.

76) Which statement about all-risks marine insurance is true?

A) All-risks insurance does not cover all physical loss or damage.
B) All-risks marine insurance is more expensive than the other two types of insurance.
C) All-risks insurance covers war risks.
D) Premiums for all-risks insurance are fixed and not dependent on other factors.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

All-risks marine insurance covers all physical loss or damage from any external cause and is more expensive than the other two types of policies.

77) The European Union uses a Conformité Européene (CE) mark on shipments, which indicates that

A) the shipment has been paid for by the shipper.
B) the merchandise conforms to European requirements.
C) the country of origin is in the EU.
D) the shipment must be inspected when sent to any EU country.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

The European Union requires the Conformité Européene (CE) mark, which indicates that merchandise conforms to European health, safety, and environmental requirements. It is the European “trade passport”: once a product has this mark, it can travel to any other EU member country without modification.

78) An inspection certificate that is required by buyers of grain, foodstuffs, and live animals is issued in the United States by

A) the Federal Trade Commission.
B) the Department of Agriculture.
C) the Department of Commerce.
D) the Food Safety Commission.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

An inspection certificate is required frequently by buyers of grain, foodstuffs, and live animals. In the United States, inspection certificates are issued by the Department of Agriculture.

79) One means of shipment that reduces theft and handling costs is to use ________, which are sent sealed and opened at the destination.

A) containers
B) cartons
C) crates
D) pods

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

One means of reducing both theft and handling costs is to use containers, large boxes—8 feet by 8 feet by 10, 20, or 40 feet—that the seller fills with the shipment in the firm’s warehouse. Once packed, the containers are then sealed; they are opened when the goods arrive at their final destination.

80) Delivery speed matters most when the shipment is

A) perishable.
B) lightweight.
C) fragile.
D) expensive.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

Perishable food products and live animals require fast delivery or they cannot be exported.

81) What is the name of the innovation in cargo handling that has brought the benefits of containerization to ports unable to invest in the expensive lifting equipment required for containers?

A) LASH
B) lighters
C) RO-RO
D) Panamax

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

An innovation in cargo handling is RO-RO (roll on–roll off) ships. Loaded trailers and any equipment on wheels can be driven onto these specially designed vessels. RO-RO service has brought the benefits of containerization to ports that have been unable to invest in the expensive lifting equipment required for containers.

82) Independent businesses that handle import shipments for compensation are

A) bonded warehouses.
B) freight forwarders.
C) importing agents.
D) customhouse brokers.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

Independent businesses that handle import shipments for compensation are customhouse brokers.

83) When exporting, what would a business use to arrange transportation for the goods after they leave customs and keep track of import quotas and how much of the quota has been filled at the time of the import?

A) bonded warehouses.
B) freight forwarders.
C) importing agents.
D) customhouse brokers.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

Customhouse brokers will arrange transportation for the goods after they leave customs if necessary and keep track of import quotas and how much of the quota has been filled at the time of the import.

84) A(n) ________ is an area authorized by customs authorities for storage of goods on which payment of import duties is deferred until their removal.

A) customhouse
B) import warehouse
C) bonded warehouse
D) collection area

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

A would-be importer can put goods in a bonded warehouse or a foreign trade zone where merchandise can be stored without paying duty and wait for the rest of the year, abandon them, or send them to another country.

85) The ________ is a classification system for the commodities traded internationally, and it includes interpretive notes that help determine the classifications.

A) Harmonized System
B) International Classification System
C) Unit Reporting System
D) Customs Classification System

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

The Harmonized System is a classification system for the more than 200,000 commodities traded internationally, and it includes interpretive notes that help determine the classifications.

86) Once the potential exporter has established that there may be a market for the firm's products, the next task is to draft the ________ plan.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

Once the potential exporter has established that there may be a market for the firm's products, the next task is to draft the export marketing plan.

87) For U.S. firms that already are exporting, the ________ Administration offers export promotion activities that include export counseling, analysis of foreign markets, assessment of industry competitiveness, and development of market opportunities and sales representation through export promotion events.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

For U.S. firms that already are exporting, the ITA offers export promotion activities that include export counseling, analysis of foreign markets, assessment of industry competitiveness, and development of market opportunities and sales representation through export promotion events

88) Once the firm knows that a potential market exists, it needs to choose between exporting ________ through U.S.-based exporters and exporting ________ using its own staff.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation

Once the firm knows that a potential market exists, it needs to choose between exporting indirectly through U.S.-based exporters and exporting directly using its own staff.

89) The Incoterm acronym CIP (named destination) refers to the situation where ________ and ________ are paid to destination, with risk passing from the seller when goods are handed to the carrier.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm acronym CIP (named place of destination) refers to the situation where carriage and insurance are paid to destination, with risk passing from the seller when goods are handed to the carrier.

90) The Incoterm acronym FAS (named loading port), refers to ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm acronym FAS (named loading port), refers to "free alongside ship." The seller clears the goods for export and places them by the ship, and risk passes from the seller at the ship's rail.

91) The Incoterm acronym FOB (named loading port), refers to ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

The Incoterm acronym FOB (named loading port), refers to "free on board." The seller loads the goods for export onto the ship, and risk passes from the seller at the ship's rail.

92) Many nations, especially those of Latin America, follow the ________ Doctrine, which holds that contractual dispute cases should be tried under local, and not foreign, law.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Many nations, especially those of Latin America, follow the Calvo Doctrine, which holds that contractual dispute cases should be tried under local, and not foreign, law.

93) A document issued by the buyer's bank in which the bank promises to pay the seller a specified amount under specified conditions is a ________.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Remember
Difficulty : 1 Easy
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

A letter of credit (L/C) is a document issued by the buyer's bank in which the bank becomes an intermediary in the sale, promising to pay the seller a specified amount under specified conditions.

94) Before opening a letter of credit, a buyer frequently requests a ________. This is the exporter's formal quotation, a description of the merchandise, price, delivery time, proposed method of shipment, terms of sale, and ports of exit and entry.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

Before opening a letter of credit, a buyer frequently requests a pro forma invoice. This is the exporter's formal quotation, a description of the merchandise, price, delivery time, proposed method of shipment, terms of sale, and ports of exit and entry.

95) An unconditional order drawn by the seller that instructs the buyer to pay the draft on presentation or at an agreed future date and that must be paid before the buyer receives shipping documents is known as a(n) ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms

An unconditional order drawn by the seller that instructs the buyer to pay the draft on presentation (sight draft) or at an agreed future date (time draft) and that must be paid before the buyer receives shipping documents is known as an export draft.

96) A ________ is a time draft with a maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank's obligation.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

A banker's acceptance is a time draft with a maturity of less than 270 days that has been accepted by the bank on which the draft was drawn, thus becoming the accepting bank's obligation.

97) The sale of an exporter's accounts receivable on ordinary goods, with the balance of the payment due upon delivery or soon after is known as ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

The sale of an exporter's accounts receivable on ordinary goods, with the balance of the payment due upon delivery or soon after, is known as factoring.

98) Rebates on customs duties are known as ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

Rebates on customs duties are known as customs drawbacks.

99) ________ act as agents for exporters and prepare documents, book space on carriers, and otherwise act as the exporter's traffic department.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

A foreign freight forwarder acts as an agent for the exporter. Foreign freight forwarders prepare documents, book space with a carrier, and in general act as the firm's export traffic department.

100) The U.S. Department of Commerce form used to control export shipments and record export statistics is the ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

The U.S. Department of Commerce form used to control export shipments and record export statistics is the shipper's export declaration.

101) A document issued by the carrier that is a contract for the shipment, a receipt for the goods shipped, and a certificate of ownership is a(n) ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

A document issued by the carrier that is a contract for the shipment, a receipt for the goods shipped, and a certificate of ownership is an export bill of lading.

102) The three kinds of marine insurance policies are ________ named perils, ________ named perils, and all risks.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

There are three kinds of marine insurance policies: basic named perils, broad named perils, and all risks.

103) The EU mark that indicates that merchandise conforms to European health, safety, and environmental requirements is the ________ mark.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.

The EU requires the Conformité Européene (CE) mark, which indicates that merchandise conforms to European health, safety, and environmental requirements.

104) Independent businesses that handle import shipments for compensation are ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

Independent businesses that handle import shipments for compensation are customhouse brokers. Their functions parallel those of foreign freight forwarders but on the import side of the transaction.

105) A ________ is an area authorized by customs authorities for storage of goods on which payment of import duties is deferred until their removal.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

A bonded warehouse is an area authorized by customs authorities for storage of goods on which payment of import duties is deferred until their removal.

106) HTSA is the U.S. version of the global tariff code known as the ________.

Question Details
AACSB : Reflective Thinking
Bloom's : Understand
Difficulty : 2 Medium
Accessibility : Keyboard Navigation
Learning Objective : B-05 Identify import sources.
Topic : Overview of Importing and Exporting

The Harmonized Tariff Schedule of the United States (HTSA or HTUS) is the U.S. version of the Harmonized System, the global tariff code, used worldwide.

107) Compare and contrast three sources of export counseling and support in the U.S. and describe what they offer to businesses looking to export.

Question Details
AACSB : Reflective Thinking
Learning Objective : B-01 Identify sources of export counseling and support.
Topic : Information Sources and Government Assistance to Exporting
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard

108) Explain how Incoterms work. What are they and what do they describe?

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Learning Objective : B-02 Explain the Incoterms, pricing, terms of sale, and payment.
Topic : Incoterms
Bloom's : Analyze
Difficulty : 3 Hard

109) Choose three sources of export financing and how they function, who they benefit, and when they are not a good choice for financing.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Bloom's : Analyze
Difficulty : 3 Hard
Learning Objective : B-03 Describe sources of export financing.
Topic : Export and Import Financing

110) "Although air freight rates are usually higher than ocean freight rates, it may be less costly for a firm to ship by air." Explain why this statement is correct or incorrect.

Question Details
AACSB : Reflective Thinking
Accessibility : Keyboard Navigation
Topic : Overview of Importing and Exporting
Learning Objective : B-04 Describe export documentation.
Bloom's : Analyze
Difficulty : 3 Hard