Banking Financial Awareness · Commerce Accountancy

Credit, Debt, and Finance

1,435 Questions

This topic covers essential concepts of credit, debt, and finance including bankruptcy, debt recovery, and financial acts. These questions are frequently asked in banking and IBPS exams. Test your knowledge of financial terminology and loan classifications.

Debt recovery actsBankruptcy filing proceduresFinancial classificationsMedium term financeCredit loss management

Credit, Debt, and Finance Questions

Multiple choice

Debtor collection period depends upon the

  1. nature of the industry

  2. seasonal character of the business

  3. credit policy of the firm

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debtor collection period is different in different types of industries. It also differs according to the terms and conditions of the policy and the nature of the product.

Multiple choice

Banks generally prefer debt equity ratio at

  1. 1 : 1

  2. 1 : 3

  3. 2 : 1

  4. 3 : 1
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Debt/equity ratio is a debt ratio used to measure a company's financial leverage. It is calculated by dividing a company's total liabilities by its stockholders' equity. Therefore, it is considered good when it is 2 : 1.

Multiple choice

The client can instruct the bank to collect money, say interest or dividend on investments made by the client and to make payments say premiums of insurance policy on his behalf. The bank _______ the client’s account with such collections made and ________ the clients account with such payments.

  1. credits, credits

  2. debits, debits

  3. credits, debits

  4. debits, credits
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The bank credits the account when the bank credits amount in the account. On the other hand, when the bank deducts any amount from your account, it debits the account. 

Multiple choice

Finanz

  1. der

  2. die

  3. das
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Finanz (often used in compounds like Finanzamt) is feminine, taking the article die.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

Lease financing provides finance diluting the ownership or control of business.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Lease financing provides finance diluting the ownership or control of business.-this is a false statement as lease financing does not provide finance diluting the ownership of the business.Lease rentals paid by the lessee are deductible for computing taxable profits.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

Simple documentation makes it easier to finance assets, is a ________ of lease financing.

  1. Function

  2. Role

  3. Merit

  4. Limitation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Lease financing in other words is renting of an asset for some specific period. The lessee pays a fixed periodic amount called lease rental to the lessor for the use of the asset. Therefore simple documentation makes it easier to finance assets and is a merit of lease financing.

Multiple choice commerce sources of business finance - 2 lease financing non-institutional sources - medium-term long term sources of finance public deposits

Which of the following is a merit of lease financing?

  1. It enables the lessee to acquire the asset with a lower investment.

  2. The risk of obsolescence is borne by the lesser.

  3. The lease agreement does not affect the debt raising capacity of an enterprise

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Few merits of lease financing are: It enables the lessee to acquire the assets with low investment, the risk of obsolescence is borne by the lessor, the lease agreement does not affect the debt raising capacity of an enterprise.

Multiple choice business organisation import and export procedure export trade procedures and formalities of exports and imports import and export

The lending method and the segregation of excess borrowings ____________.

  1. apply to the exporting units

  2. apply to importing units

  3. do not apply to exporting units

  4. do not apply to importing units
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Export credit and financing regulations, including the segregation of excess borrowings, are specifically designed to manage the financial risks associated with exporting units.

Multiple choice business organisation and correspondence bank 2 - accounts maintained by a bank functions and services of banks role of banks in economic development and modes of money transfer accounts and other services

In ECS do you get interest?

  1. Yes

  2. No

  3. No, it is a postal scheme

  4. No, it is taxpaying scheme
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts towards telephone / electricity / water dues, cess / tax collections, loan installment repayments, periodic investments in mutual funds, etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa using the services of a ECS Centre at a ECS location.

Multiple choice commerce sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

The merit(s) of public deposits is/are ______________________.

  1. Cost of public deposits is generally lower than the cost of borrowings.

  2. Public deposits do not usually create any charge on the assets of the company.

  3. As the depositors do not have voting rights, the control of the company is not diluted.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Public deposits refers to the unsecured securities which is invited from the public. It is mainly used to finance the working capital of the company. The merits of public deposits are:
a) Cost of public deposits is generally lower than the cost of borrowings.b) Public deposits do not usually create any charge on the assets of the company.
c) As the depositors do not have voting rights, the control of the company is not diluted.
Multiple choice commercial studies sources of business finance - 2 public deposits non-institutional sources - medium-term financing lease financing

Rates of interest offered on public deposits are usually _________ than that offered on bank deposits.

  1. Higher

  2. Lower

  3. Equal

  4. Both a and b
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
The deposits that are raised by organisations directly from the public are known as public deposits. Rates of interest offered on public deposits are usually higher than that offered on bank deposits. 

Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. The organisation in return issues a deposit receipt as acknowledgment of the debt.
Multiple choice the wto and india world trade organisation international business commerce business studies

IMF acts as a __________ credit institution.

  1. long-term

  2. short-term

  3. both A & B

  4. neither A & B
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The IMF provides short-term financial assistance to member countries to help them stabilize their balance of payments. It is not designed for long-term development financing, which is the role of institutions like the World Bank.