Banking Financial Awareness · Commerce Accountancy

Credit, Debt, and Finance

1,382 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 book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

Drawee or payee in whose favor the promissory note is drawn is also called as________.

  1. Promisee

  2. Promisor

  3. Creditor

  4. Debtor
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The person to whom the promise to pay a sum of amount is made is called promisee. He is the person in whose favor the promissory note is drawn.

Multiple choice book keeping and accountancy accounting for bills of exchange meaning, definition and characteristics of promissory note promissory note bills of exchange and promissory note nature, advantages and types of cheques

In a promissory note, the amount of money payable ____________________.

  1. Must be certain

  2. May be certain or uncertain

  3. Is usually uncertain

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A promissory note must be for a definite sum of money. Certainty of the amount is a fundamental legal requirement.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Which of the following is a correct statement ?

  1. Bills Receivable Account is a Real Account.

  2. In order to renew a bill, the original bill need not be cancelled.

  3. At the time of endorsement of a bill, the drawee debts Bills Payable Account.

  4. When noting charges are paid by the bank at the time of dishonour of the bill, the drawee Credits Bank Account.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Bills Receivable is considered a real account in many accounting contexts as it represents a legal instrument or asset. Option B is wrong because renewal requires cancellation; C is wrong because the drawee does not record endorsement; D is wrong because the drawee would credit the creditor, not the bank.

Multiple choice elements of accounts ledger and posting meaning of bill of exchange index of ledger, forms of ledger and process of posting posting of entries in ledger

Bill Payable is _________.

  1. Real A/c

  2. Personal A/c

  3. Nominal A/c

  4. Suspense A/c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The accounts which are related to individuals, persons and firms are called personal accounts. Personal accounts are further classified into Natural Personal account, Artificial Personal Account and Representative Personal account. Bills Payable represents creditors for purchases. And every creditor is a person whether artificial or personal. Therefore, bills payable is a personal account.

Multiple choice business organisation stock exchange meaning and functions of capital market capital markets listing of securities, stock market players

Long-term borrowing is undertaken in.

  1. Money market

  2. Capital market

  3. Bullion market

  4. Foreign exchange market
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The capital market is designed for long-term financing, where companies and governments raise capital for extended periods, unlike the money market which focuses on short-term liquidity.

Multiple choice book keeping and accountancy adjustments in preparation of financial statements accrued income earned or accrued income need for adjustment, closing stock and outstanding expenses

Accrued interest will be ________ to interest account.

  1. Debited

  2. Credited

  3. No effect

  4. None
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The amount of accrued interest for the recipient of the payment is a debit to the interest receivable (asset) account and a credit to the interest revenue account. The debit is rolled into the balance sheet (as a short-term asset) and the credit into the income statement.

Multiple choice book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

Which of these is not a method of redemption of debentures ?

  1. Purchase in open market

  2. Auction of debentures

  3. Drawing of lots

  4. Payment in lump sum
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Standard methods for redemption of debentures include purchase in open market, drawing of lots, and payment in lump sum. Auction is not a recognized method for debenture redemption.

Multiple choice book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

Debentures can be redeemed _____________.

  1. At par

  2. At premium

  3. At discount

  4. Both (a) and (b)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debentures can be redeemed at par (face value), at a premium (above face value), or sometimes at a discount, depending on the terms of the issue.

Multiple choice book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

When a company issues debenture, it usually mentions the terms on which they will be redeemed on their maturity.

  1. True

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

It is a legal and accounting requirement to state the terms of redemption (maturity date, price, etc.) at the time of issuing debentures.

Multiple choice book keeping and accountancy company accounts - redemption of debentures debentures redemption methods of redemption of debentures accounting effects for redemption of debentures

Premium on redemption of debenture A/c is a _____.

  1. personal A/c

  2. real A/c

  3. nominal A/c

  4. suspense A/c
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Premium on redemption is treated as a loss or expense for the company, and in accounting, expenses are classified under nominal accounts.