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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Which of the following is true regarding foreign trade zones?

  1. a. They are pieces of land physically located in foreign countries that are subject to the laws of the United States.
  2. b. They must be located near seaports.
  3. c. Goods that enter a foreign trade zone are not subject to tariff until they leave the zone for destinations in the United States.
  4. d. Goods sold in a foreign trade zone are not subject to U.S. income taxes.
  5. e. All of these.

To determine

Identify the correct description for foreign trade zones.

Explanation

Foreign Trade Zone:

Foreign trade zone are the areas that are located in a home country, however these are treated like foreign areas for the purpose of levying duties and taxes. Goods which enter this zone are not treated for duty until they are in this zone.

c.

FTZs are treated like areas outside the home country and import duties are not paid for the goods that are being imported, until these goods are further sold from these areas within the country. Therefore, this is the correct option.

a.

These pieces of land are physically located in the home country...

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