Credit and Collection

This is a loan extended intended for the acquisition of fertilizers, pesticides, seedlings, transportation of agricultural products and farm improvements.

• Commercial credit
• Consumer credit
• Industrial credit
• Agricultural credit

It is the most common credit score used to determine loan eligibility and the interest rates a person pays.

• SEC score
• FICO score
• DOF score
• BSP score

These are detailed ways of carrying out policies.

• company practices
• procedure
• company objectives
• rules

The following items are the factors that determine the credit limit I - character II - capacity III - capital IV - personal loans

• I & II only
• I & III only
• I, II & III only
• I, II, III, IV

The company should send a letter to the customers in default even if they don't intend to actually go to collection of debts.

• True
• False

The main objective of a credit investigation is to verify the information given in the information sheet.

• True
• False

1. An appraisal of prospective borrowers’ ability and willingness to repay a loan, carried out by a credit analyst. a. Credit investigation b. Credit application c. Credit rating d. Credit score

• credit score
• credit rating
• Credit investigation
• Credit application

Collection procedure is laid down usually in the credit policy.

• True
• False

These consist of person's real and personal property which can be a strong foundation for credit approval.

• conditions
• collateral
• capacity
• capital

First Statement: In a marketing oriented company, the desire to push sales might lead to extension of credit to unworthy or risky parties who might end up to be bad debtors after all who will cause the collapse of the company.

• Only first statement is true
• Only second statement is true
• Both statements are false
• Both statements are true

It is normal for credit professionals to discuss with anybody something about discriminatory trade practices or anything that might be construed as restraint of trade or in violation of antitrust legislation.

• True
• False

This is the customer supplied information which is usually obtained at the time of credit application

• trade information
• bank's information
• salesman's information
• credit information sheet

In percentage of acquisition cost type of appraisal of property, the original invoice or the historical cost is considered in determining the appraised value.

• True
• False

The unpaid seller has the right to resell goods when he stops the goods in transit.

• True
• False

First Statement: Collection policy goals can take a liberal or conservative approach to collections, allowing that to define their collection procedures.

Standard credit procedures are uniform in all companies.

• True
• False

This reflects the likelihood of the borrower defaulting at any given time.

• sovereign credit rating
• short-term credit rating
• long-term credit rating
• corporate credit rating

This level assumes that the customer forgot to send payment.

• level one
• level four
• level three
• level two

Applicants in this score range are considered subprime borrowers.

• 580 - 669
• 300 - 579
• 670 - 739
• 740 - 799

The main objective of credit investigation is to

• check the family budget
• secure the credit documents.
• visit the credit applicant.
• verify the information given in the information sheet.

Leniency in the implementation of credit policies will enable the firm to sell obsolete goods or get rid of inventories which are no longer salable.

• True
• False

These are the guides in the performance of credit function of the company.

• credit
• policy
• conditions

Billing procedure addresses three tasks in the billing process, which involve the following , except

• receiving payment
• issuing invoices to customers
• creating invoices
• collecting the information needed to construct an invoice

Credit according to form

• Cash/Merchandise form of credit
• Short-term/ intermediate-term/ long-term loans
• Investment/ agricultural/ real estate/ industrial/ export credit
• Consumer/Commercial/commercial bank credit/loan

Billable transactions means those lane level transactions delivered to the authority's toll collection system such that they may be billed to accounts.

• True
• False

The amount the creditor believes is the maximum debt the customer can incur and repay promptly.

• loanable amount
• credit score
• credit limit

Past due accounts are also called

• productivity loan
• non-performing loans
• invoicing
• personal loans

Written policies have distinct advantages such as I - More precision II - More stability III - Avoidance of unintentional changes caused by varied opinion on credit IV - Continuity in credit operations V - Over-all company objectives

• I, II, III, IV, V
• I, II, III, IV
• II, III, IV, V
• I, II, III, V

First statement: Bill is a statement that indicates the money disbursed for payment of products or services . Second statement: How the firm collected money from customers depends on the type of business.

• Only first statement is true
• Only second statement is true
• Both statements are true
• Both statements are false

First statement: Collection procedure is laid down usually in the credit policy. Second statement: When the credit firm have made several contacts with a non-paying customer and he hasn't resolved the account, the credit firm may need to consider legal action.

• Both statements are true
• Only first statement is true
• Both statements are false
• Only second statement is true

In relation to credit application, bank reports

• use statistics to determine the risk associated with lending
• can provide a good view of the business’s liquidity, profitability and cash flow.
• give details of the bank’s relationship with the company, the company’s borrowing capacity and its level of debt.
• loan and bill payment history kept by a credit bureau.

This is actual working steps that should be followed in an appropriate order to accomplish a desired result.

• Procedure
• Company objectives
• Company practices
• Rule

This level assumes that the customer has no intention to pay and states a specific data by which payment must be made on collection processes that will be initiated.

• level two
• level one
• level three
• level four

Credit ratings apply to individuals, while credit scores apply only to businesses and government.

• True
• False

A company that uses statistics and mathematical formulas called algorithms to determine a person’s credit score.

• FICO
• DOF
• SEC
• BSP

A credit score is a person's financial story packed into a three-digit number, which indicates a person's credit risk.

• True
• False

AAA Merchandising has past due accounts amounting to P 750,000 and has maturing accounts of P 4,500,000. If the actual collection is P 5,000,000, what is the total collection goal?

• P 750,000
• P 5,250,000
• P 9,750,000
• P 4,500,000

The first step in checking customer’s credit rating is to ask your new customers to complete a credit application form.

• True
• False

File the retained invoice copies as needed, either by invoice number or by customer.

The goal of the investigation is to obtain factual and accurate information that will lead to an appropriate credit decision.

• True
• False

When you have several contacts with a non-paying customer and he hasn’t resolved the account, you may need to

• call the person in charge of paying the invoice and remind him the account is past due.
• send him a second invoice.
• listen to customer response and try to be understanding.
• consider legal action.

The following are the factors affecting restrictive credit policy: I - Seller over-extension II - Seller monopoly III - Narrow profit margin IV - Unfavorable business condition

• I and II only
• IV only
• I, II, III, IV
• I, II,& III

A property that is not owned and not possessed by the borrower is unacceptable as collateral.

• True
• False

An appraisal of prospective borrower's ability and willingness to repay a loan, carried out by a credit analyst is

• Credit score
• Credit investigation
• Credit application Credit rating Credit score
• Credit rating Credit score

Some of the external sources that can be used for credit investigation are I. Credit bureau II. Newspapers III. Court records IV. Banks V. Credit investigator

• I, II, III
• 1, II, III, IV
• I, II,III,IV, V
• I & II only

The building of the property offered for collateral has a total area of 900 sq. m. The prevailing construction cost of the commercial building is P 12,000. What is the value of the building?

• P 8,000,000
• P 10,800,000
• P 9,000,000
• P 12,000,000

The process of generating invoice to recover sales price from the customer is called

• billing
• collecting
• selling
• purchasing

The ability to obtain a thing of value in exchange for a promise to pay definite sum of money on future determinable time is

• collection
• credit procedure
• money
• credit

This is the customer supplied information which is usually obtained at the time of credit application.

• trade information
• bank's information
• salesman's report
• credit information sheet

A property of appraisal is an estimate of

• collection
• Credit limit
• price
• Cost

Letter of credit is a tool for financing international trade.

• True
• False

It is normal for credit professionals to discuss with anybody about discriminatory trade practices or anything that might be construed as restraint of trade or in violation of antitrust legislation.

• True
• False

Only estimated 8% of the applicants in this score range are likely to be seriously delinquent in the future.

• 740 - 799
• 670 - 739
• 580 - 669
• 300 - 579

First statement: Bill is a statement that indicates the money disbursed for payment of services or products. Second statement: How the firm collected money from customers depends on the type of business.

• Both statements are false
• Both statements are true
• Only second statement is true
• Only first statement is true

The firm should send out bills more frequently or make phone calls in between to remind customers to pay.

• True
• False

Right of lien is the

• right against the buyer
• right to stop the goods in transit
• right to retain possession of goods until full payment of account
• right to resell goods

Long-term credit ratings predict the borrower's likelihood of defaulting at any given time in the extended future.

• True
• False

A statement that defines or restricts the actions that a credit professional can take or not take in a specific situation or decision.

• objective
• procedure
• rule
• practice

In the appraisal of machinery and equipment, the original invoice or historical cost is considered in determining the appraised value of this method.

• Replacement cost
• Zonal valuation
• Market value
• Percentage of acquisition cost

Credit that involves exact amount of money loaned, or money value for non-cash form of credit refers to

• the ability to obtain a thing of value
• a promise to pay
• definite sum of money
• payable on demand or future time

First statement: Bill is the process of generating invoice to recover sales price from the customer. Second statement: Billing is a document that indicates the money owed for services or products.

• Both statements are false
• Only first statement is true
• Both statements are true
• Only second statement is true

The Billing process

• I, II, III, IV
• II, IV, I, III
• II, III, IV, I
• II, I, III, IV

List of steps for ordered execution leading to when and how to collect past-due amounts

• collection goal
• collection procedure
• credit policy
• collection policy

Savings in time and transaction costs will result in higher margins for all the components of the distribution system.

• True
• False

Debtors use credit scores to evaluate the probability that an individual will repay his or her debts.

• True
• False

Collection policy is the detailed list of steps for ordered execution leading to when and how to collect past-due amounts.

• True
• False

Credit may be secured to establish an enterprise and finance its various transactions.

• True
• False

Right of lien is applicable when the goods have not been delivered or still in the seller’s possession.

• True
• False

The credit company should send out bills more frequently, or make phone calls in between, to remind customers to pay.

• True
• False

The following items enumerated below are instances of fraud, except

• Spurious titles
• Mortgaging a title that does not belong to the borrower
• Land with torrens title
• Property claims on government land

This outlines the activities and responsibilities in obtaining credit approval for a potential customer before sales

• credit policy procedure
• credit investigation
• policy
• credit policy

These are the C's of credit, except

• character
• credit standing
• capacity to pay
• capital

The standardized form that a customer or borrower uses to request credit is the

• credit evaluation form
• invoice
• credit application
• application form

Ownership and possession of properties presented as collateral need not be verified.

• True
• False

1. A property of appraisal is an estimate of a. Cost b. Credit limit c. Price d. Collection

• credit
• collection
• price
• cost

Credere means

• confidence
• promise
• to pay
• trust

Spurious titles of property can be accepted as collateral to obtain credit.

• True
• False

The following are the advantages of credit except

• Credit contributes to the extravagance and carelessness on the part of the borrowers
• Credit in its nature, plays a vitals and major part of the economy.
• Credit may be secured to establish an enterprise and finance its various transactions, adding to its growth.
• Credit also makes capital more productive

I. Credit investigators are responsible for performing credit analysis of clients II. Credit investigators work for bank, credit management companies, trading organizations granting credit

• Both statements are false
• Both statements are true
• Only first statement is true
• Only second statement is true

The one who has the major role in developing the credit policies is the

• Sales representative
• Credit investigator
• Credit manager
• Sales manager

First statement: According to the “Balance Small Business”, in order to get paid by debtors, collection process should vary and execute based on the kind of customers. Second statement: Bill is a statement that indicates the money disbursed for payment of services or products.

• Both statements are false
• Only second statement is true
• Both statements are true
• Only first statement is true

It is usually given as number, is also an expression of worthiness that can be used for businesses or individual expression consumers. a. Credit limit b. Credit standing c. Credit score d. Credit rating

• credit rating
• credit score
• credit standing
• credit limit

The routine functions performed by credit personnel I. Checking the discount II. Evaluating credit risk III. Checking credit ratings IV. Checking orders for credit

• I, II, III, IV
• I, III, IV, II
• II, III, IV, I
• IV, I, II, III

AAA Merchandising has past due accounts amounting to P 750,000 and has maturing accounts of P 4,500,000. If the actual collection is P5,000,000, what is the total collection goal for the period?

• P 750,000
• P 5,250,000
• P 4,500,000
• P 9,750,000

He is responsible for reviewing credit application for completeness and accuracy.

• Credit manager
• Credit bookkeeper
• Credit investigator
• sales representative

. Spurious titles of property can be accepted as collateral to obtain credit.

• True
• False

The first step in collecting a debt from a customer is to

• be understanding while remaining firm.
• listen to customer’s response.
• consider legal action.
• send him a second invoice clearly marked as overdue.

Victory Appliance Co. Has past due installment as of September 30, 2019 amounting to P 300,000 and installment falling due on September 2019, P 800,000. What is the collection efficiency as of September 30, 2019 if the actual collection is P 880,000?

• 90.91%
• 67.80%
• 37.50%
• 80%

These are the factors in the determines credit limit I. Character II. Capacity III. Capital IV. Personal loans

• I, II, III, IV
• I, II, & III only
• I & II only
• I & III only

The following are elements of credit except

• definite sum of money
• ability to obtain a thing of value
• promise to pay
• collection Ability to obtain a thing of value A promise to pay Definite sum of money

For individual applicant, the following credit information should be secured and verified I. Customer's name II. Age III. Employment IV. Bank reference

• I, II, III, IV
• I, III, & IV only
• III & IV only
• I, II, & IV only

. This level assumes that the customer forgot to send payment

• level two
• level four
• level three
• level one

Open-end credit is also known as

• Revolving credit
• Commercial credit
• Installment credit
• Standing credit

The following are the C's of credit except

• capacity to pay
• credit standing
• capital
• character

These are the factors that determine credit limit I. Customers past performance II. General prevailing condition III. Length of credit period IV. Company policy

• I & II only
• I, II, & III only
• I only
• I, II, III, & IV

Collection efficiency is equal to actual collections over collection goal

• True
• False

Victory Appliance Co. Has past due installment as of September 30, 2019 amounting to P 300,000 and installment falling due on September 2019, P 800,000. If the actual collection is P 880,000, what is the total collection goal for September 2019?

• P 880,000
• P 1,180,000
• P 1,100,000
• P 800,000

Things of value may mean

• a promise to pay
• cash form of credit or merchandise form of credit
• exact amount of money loaned
• payable on demand

The individual or entity that lends money to another individual or entity is the

• debtor
• creditor
• investigator
• applicant

The billing process I. Review billing information II. Prepare and send invoices III. Print invoice batch IV. File invoice copies

• I, III, II, IV
• I, III, IV, II
• II, IV, I, III
• I, II, III, IV

A document with a list of products or services that the customer needs to pay

• bill
• official receipts
• voucher
• invoice

This refers to the personality of the debtor.

• condition
• character
• capacity to pay
• collateral

Applicants in this range are considered subprime borrowers.

• 740 - 799
• 300 - 57958
• 580 - 669
• 670 - 739

Victory Appliance Co. Has past due installment as of September 30, 2019 amounting to P 300,000 and installment falling due on September 2019, P 800,000. If the actual collection is P 880,000, what is the collection efficiency as of September 30, 2019?

• 37.5%
• 90.91%
• 80%
• 67.8%

Audited financial statements

• loan and bill payment history kept by a credit bureau.
• can provide a good view of the business’s liquidity, profitability and cash flow.
• use statistics to determine the risk associated with lending
• give details of the bank’s relationship with the company, the company’s borrowing capacity and its level of debt.

In the contract of sale, the seller can sue the buyer if he refused to pay his obligation. The buyer is liable to pay I. The price of the goods delivered II. Damages III. Interest for the delayed payment

• I
• I, II, III
• I & II
• II

Sovereign credit ratings apply to

• businesses
• individuals
• corporations
• national government

When the credit firm have made several contacts with a non-paying customer and he hasn't resolved the account, the credit firm may need to consider legal action.

• True
• False

How the firm collected money from customers depends on the type of business.

• True
• False

A promise to pay, to be valid should be in writing, acknowledge by one party only.

• True
• False

They are responsible for performing credit analysis of clients.

• creditor
• credit investigator
• Debtor
• credit collector

Closed-end credit is also called

• Standing credit
• Installment credit
• commercial bank credit
• Revolving credit

A credit investigation is made up of I. Personal interview with the applicant in his residence or place of business or both II. Documentary verification III. Inquiry from third parties Appraise the creditors’ ability to pa

• I & II only
• I, II, III & IV
• I only
• I, II & III only

Applicants in this range are at the top of the list for the best rates from the lenders

• 580 - 669
• 740 - 799
• 800 - 850
• 670 - 739

First Statement: Credit in its nature plays a vital and major part in any economy.

• Only second statement is true
• Both statements are true
• Only first statement is true
• Both statements are false

Only 8% of the applicants in this score range are likely to become seriously delinquent in the future.

• 670 - 739
• 740 - 799
• 580 - 669
• 800 - 850

The debtor refers to individual or entity that

• approves credit application.
• Investigate for the approval of credit application.
• lends money to individual or entity.
• borrows money from another individual or entity.

Credit procedures and practices includes such operations as: I. Credit investigation and appraisal II. Documentation, loan or product releases and collaterization III. Credit application and interview IV. Credit evaluation, recommendation and approval V. Collection, release of collaterals, and documents

• I, III, V, IV, II
• II,IV,I,V,III
• I,II,III,IV,V
• III,I,IV,II,V

It refers to the set of procedures a company uses to ensure payment of overdue account receivables.

• credit procedure
• collection procedure
• credit policy
• collection policy

This is information obtained from the suppliers of the customer.

• Salesman's report
• Trade information
• Bank information
• Personal information

A credit report

• is a loan and bill payment history kept by a credit bureau.
• use statistics to determine the risk associated with lending
• give details of the bank’s relationship with the company, the company’s borrowing capacity and its level of debt.
• can provide a good view of the business’s liquidity, profitability and cash flow.

Movable machinery and equipment are those that cannot be uprooted or removed without defacing or destroying the property.

• True
• False

First Statement: Verification of the applicant’s personal and credit reputation can be done through third-party inquiries. Second Statement: Spurious titles of property can be accepted as collateral to obtain credit.

• Both statements are false
• Only first statement is true
• Both statements are true
• Only second statement is true

Detailed list of steps for ordered execution leading to when and how to collect past-due amounts

• Collection goal
• collection procedure
• credit procedure
• collection policy

The specific procedures for collecting a debt cannot be changed and same procedure should be applied in any situation throughout the process.

• True
• False

He is responsible for application review and investigation of the applicant's credit history.

• Credit bookkeeper
• Sales representative
• Credit manager
• Credit investigator

First statement: The unpaid seller has the right to resell goods when he stops the goods in transit regardless of the condition.

AAA Merchandising has past due accounts amounting to P 750,000 and has maturing accounts of P 4,500,000. What is the collection efficiency If the actual collection is P 5,000,000?

• 101%
• 90%
• 95.24%
• 85.71%

4. I. Credit investigators are responsible for performing credit analysis of clients

• Only second statement is true
• Only first statement is true
• Both statements are true
• both statements are false

A quantified assessment of the credit worthiness of a borrower in terms of general forms or with respect to a particular debt or financial obligation is known as

• credit rating
• credit limit
• credit standing
• credit approval

The promise to pay should specify

• Venue, principal amount, maturity date
• Principal amount, maturity value, interest
• Principal amount, interest, maturity date
• Principal amount, interest, venue

Credit scores apply only to individuals

• True
• False

Billing procedure addresses three tasks in the billing process, which involve the following, except

• receiving the payment
• creating invoices
• collecting the information needed to construct an invoice
• issuing invoices to customers

Upper limit is usually establish within which the credit limit of any borrower is set on the basis of his ability to pay and on the requirements as judged by the purposes for which the loan is made. This refers to the limits on

• arbitrary method
• limits on subject requirements
• personal loans
• limit on debt-paying powers

During wide fluctuations of money value, it is unwise for creditors to grant loans.

• True
• False

The following are the advantages of credit limits, except

• Credit limits reduce the cost of credit management
• Credit limit represents the amount the creditor believes is the maximum debt the customer can incur and repay promptly
• Minimize wasted sales effort and provide to some degree a more or less automatic control over the account receivable account
• Credit limits operate as an overall device for the control of credit extension

Sovereign credit ratings apply to business and government.

• True
• False

This refers to the information obtained from the suppliers of the customer.

• trade information
• Salesman's report
• Personal information
• Bank information

1. This level assumes that the customer has no intention to pay and states a specific data by which payment must be made on collection processes that will be initiated.

• level four
• level one
• level two
• level three

Credit according to purpose

• Consumer/Commercial/commercial bank credit/loan
• Cash/Merchandise form of credit
• Investment/ agricultural/ real estate/ industrial/ export credit
• Short-term/ intermediate-term/ long-term loans

Immovable properties are classified as either agricultural, residential, commercial, or industrial.

• True (Midterm Exam)
• False

The specific procedures for collecting a debt can vary, a company needs to follow several general guidelines to ensure collection while trying to retain customers for future sales.

• True
• False

In commercial bank credit, the creditor is a commercial bank while the debtor can be a business firm or private businessman.

• True
• False

The following are elements of credit, except

• definite sum of money
• a promise to pay
• ability to obtain a thing of value
• collection

Statement that indicates the money owed for services or products

• invoice
• official receipt
• sales invoice
• bill

General guideline on how to act in an ordinary or extra-ordinary situation that recur from time to time bearing in mind the accomplishment of established company objectives

• credit
• policy
• credit policies
• credit procedure

This predicts the borrower likelihood of defaulting at any given time in the extended future.

• long-term credit rating
• short-term credit rating
• businesses
• individuals

It refers to the set of procedures a company uses to ensure payment of overdue account receivables

• credit procedure
• collection policy
• collection procedure
• credit policy

For individual applicants, the following credit information should be secured and verified I - Age II - References and reputation III - Income IV - Residence

• I, II, III
• I, III, IV
• III & IV only
• I, II, III, IV

AAA Merchandising has past due accounts amounting to P 750,000 and has maturing accounts of P 4,500,000. What is the collection efficiency if AAA's actual collection is P 5,000,000 ?

• 85.71%
• 95.24%
• 90%
• 101%

In percentage of acquisition cost type of appraisal of property, the new acquisition price of similar machinery and equipment is the basis used, less accumulated depreciation.

• True
• False

In investment credit, the objects of credit are merchandise or goods.

• True
• False

First statement: The credit company should send out bills more frequently, or make phone calls in between, to remind customers to pay. Second statement: The longer the bill is unpaid, the less likely is the chance to collect money from customers.

• Both statements are false
• Both statements are true
• Only second statement is true
• Only first statement is true

In marketing oriented company, the desire to push sales might lead to extension of credit to unworthy or risky parties.

• True
• False

Send out bills more promptly or make phone calls in between to remind to customers to pay.

• True
• False

Consumer credit is classified

• according to form
• according to maturity
• according to purpose
• according to type of user

Credit does not have an effect to productivity.

• True
• False

Telephone contacts can be one of the sources of credit information.

• True
• False

Medium-term loans are

• payable within six months
• payable for more than five years
• payable for a period of one to five years
• payable within a period of one year

If the property has a zonal value of P 4,500 per square meter and has an area of 950 sq. m., the property has a total appraised value of a. P 3,000,000 b. P 4,050,000 c. P 4, 500,000 d. P 4,275,000

• P 4,275,000
• P 3,000,000
• P 4.050.000
• P 4.050,00

Statement that indicates the money owed for services or products.

• bill
• official receipt
• sales invoice
• invoice

A document sent to a customer with a list of products or services they have bought and their prices, any sales tax, the total amount, and the date before which the customer must pay

• official receipt
• voucher
• sales invoice
• bill

Verification of the applicant’s personal and credit reputation can be done through third-party inquiries.

• True
• False

Credit procedures and policies include such operations as: I - credit investigation and appraisal II - documentation, loan or product releases and collaterization III - credit application and interview IV - credit evaluation, recommendation & approval V - collection, release of collateral and documents

• I, II, III, IV, V
• I, III, V, IV
• II, IV, I, V, III
• III, I, IV, II, V

Send the letter even if the company don't intend to actually go to collection of debts.

• True
• False

Bill is a statement that indicates the money disbursed for payment of services or products

• True
• False

These are the steps to set up Collection Management System I. Make plan for invoice reminders II. Determine how you deal with non-payments III. Make a plan for turning non-payees over to an outside source IV. Capture information about customer account V. Learn the laws relating to collections VI. Decide if you need to check credit

• I, III, V, II, IV, VI
• I, II, III, IV, V, VI
• II, IV, VI, I, III, V
• IV, V, VI, I, II, III, IV

These are the guides in the performance of credit functions of the company.

• credit procedure
• policy
• credit policies
• credit proposal

The bank's past due ratios are continually being monitored by top management and also by the Bangko Sentral.

• True
• False

The total amount that must be collected to bring all accounts up-to-date or in current form.

• collection goal
• collection policy
• credit policy
• collection procedure

A promise to pay to be valid should be in writing.

• True
• False

There's no need to ask for business customer's permission in checking their credit by the credit company in having a trade credit application.

• True
• False

Right to stop the goods in transit refers to

• Right of lien
• Stoppage in transit
• Right against the buyer
• Right of resale

First statement: Collection procedure is laid down usually in the credit policy. Second statement: If the bank’s past due ratio is below 25%, some of their privileges are suspended by the Bangko Sentral.

• Both statements are false
• Only first statement is true
• Only second statement is false
• Both statements are true

Loan which is intended for the purchase of house and lot, for house construction, or improvement.

• Consumer credit
• Investment credit
• Industrial credit
• Real estate loan

Corporate credit ratings apply to

• businesses
• individuals
• national government
• corporations

. A quantified assessment of the credit worthiness of a borrower in terms of general forms or with respect to a particular debt or financial obligation is known as

• credit standing
• credit limit
• credit application
• credit rating

The credit professional has an obligation to their employer and to the credit community in general to behave professionally and to guard against violating, even unintentionally, any laws against restraint of trade.

• True
• False (Midterm Exam)

In the appraisal of machinery and equipment, the original invoice or historical cost is considered in determining the appraised value in this method.

• Zonal valuation
• Replacement cost
• Percentage of acquisition cost
• Market value

Long-term credit rating reflects the likelihood of the borrower defaulting within the year.

• True
• False

The unpaid seller has the right to resell goods when he stops the goods in transit. What conditions should be considered in this case? I goods are perishable in nature II seller should notify the buyer of his intention of resale III unpaid seller resells the goods post exercising his right of lien or stoppage IV resale where the right of resale is reserved in the contract of sale V property in the goods has not passed to the buyer

• I, II, & IV
• I, II, & III
• I, II, III, IV, & V
• I, II, III, & IV

For individual applicants, the following credit information should be secured and verified, except

• income
• extramarital affairs
• employment
• payment record

The creditor has the obligation to pay debt and the debtor has the right to collect payment.

• True
• False

These are the factors affecting liberal policies I - Financial condition of the firm II - Keen competition III - Liquidation of heavy supply of merchandise IV - Seller monopoly

• II, III, IV
• I, II, IV
• I, II, III
• I, II, III, IV

FICO generally includes in the development of its credit scores with a rough estimate of the emphasis they place on each category.

• True
• False

1. he building of the property offered for collateral has a total area of 900 sq. m. The prevailing construction cost of the commercial building is P 12,000. What is the value of the building?

• P 10,800.000
• P 12,000,000
• P 8,000,000
• P 9,000,000

It is important to update credit files as a preparatory step to revising credit limit.

• True
• False

Loans, accounts, whether checking or savings accounts, provide helpful information in sizing up the customer's credit and financial ability.

• True
• False

Upper limit is usually establish within which the credit of any borrower is set on the basis of his ability to pay and on the requirements as judge by the purposes for which the loan is made.

• limits on subject requirements
• limits on debt-paying power
• personal loans
• arbitrary method

Credit applicants in this range may be required to pay a fee or deposit, and applicants with this rating may not be approved for credit at all.

• 670 - 739
• 300 - 579
• 740 - 799
• 580 - 669

Credit does not only benefit the consumer but the entire business industry as well.

• True
• False

This refers to the ability to obtain a thing of value in exchange for a promise to pay definite sum of money on future determinable time.

• credit
• money
• credit procedure
• collection

If the bank’s past due ratio is below 25%, some of their privileges are suspended by the Bangko Sentral.

• True
• False

A document with a list of products or services that the customer needs to pay.

• voucher
• official receipt
• bill
• invoice

File the retained invoice copies as needed, either by invoice number or by customer name.

• True
• False

A debt instrument with a rating below BB is considered to be a speculative grade or a junk bond.

• True
• False (Midterm Exam)

This outlines the activities and responsibilities in obtaining credit approval for a potential customer before sales orders are processed.

• credit policy procedure
• credit
• policy
• credit policy

First statement: When the credit firm have made several contacts with a non-paying customer and he hasn't resolved the account, the credit firm may need to consider legal action. Second statement: The specific procedures for collecting a debt can vary, a company needs to follow several general guidelines to ensure collection while trying to retain customers for future sales.

• Both statements are true
• Only first statement is true
• Both statements are false
• Only second statement is true