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 analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Which of the following is true when a debtor pays his dues?

  1. The asset side of the balance sheet will decrease

  2. The asset side of the balance sheet will increase

  3. The liability side of the balance sheet will increase

  4. There is no change in total assets or total liabilities
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a debtor pays their dues, cash (an asset) increases and accounts receivable (another asset) decreases by the same amount. Consequently, there is no net change in total assets or liabilities.

Multiple choice book keeping and accountancy analysis of financial statements financial statement of company rules for recording in journal dual effect of transactions, types of accounts and rules of debit and credit

Which of the following is true when a debtor pays his dues?

  1. The asset side of the balance sheet will decrease

  2. The asset side of the balance sheet will increase

  3. The liability side of the balance sheet will decrease

  4. There is no change in total assets or total liabilities
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When a debtor pays, cash increases and accounts receivable decreases. Total assets remain unchanged, and liabilities are unaffected.

Multiple choice business organisation and correspondence banking and bank transactions nature, advantages and types of cheques bills of exchange and promissory note meaning and types of banks bills of exchange, promissory notes and hundis cheques

Generally, the use of withdrawal slips is restricted to __________ account.

  1. Fixed

  2. Current

  3. Savings

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

Generally, the use of withdrawal slips are restricted to savings account. Many times a cheque is not issued to savings account holders to help customers withdraw money they are generally used in savings account.

 In case of current accounts, there is no need of withdrawal slips because cheque books are given by default and money can be withdrawn by a bearer cheque.

Multiple choice book keeping and accountancy banking transactions and accounts relating to cheque functions and services of modern banking meaning of passbook and cashbook journal entries for transactions through bank and for loans

When credit balance as per pass book is the starting point, interest allowed by bank is?

  1. Subtracted

  2. Not required to be adjusted

  3. Added

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

In case of interest allowed by bank, the entry for the same would have been entered in the pass book due to which the pass book balance would be higher than the cash book balance.

So, when credit balance as per pass book is the starting point, interest allowed by bank is to be subtracted.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Which of these is major component of external debt?

  1. Short term debt

  2. Long term debt

  3. Commercial borrowings

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

External debt is the portion of a country's debt that was borrowed from foreign lenders, including commercial banks, governments, or international financial institutions. These loans, including interest, must usually be paid in the currency in which the loan was made.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

__________ of the bill occurs when drawee has funds at disposal and makes a request to drawer or holder to accept the payment before its due date.

  1. Retirement

  2. Renewal

  3. Discounting

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

Retirement of a bill occurs when the drawee pays the bill before its due date. This is often done to receive a discount or rebate for early payment.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

Rebate on bills discounted is _______ from interest and discount in the P/L Account .

  1. added

  2. deducted

  3. not deducted

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Rebate on bills discounted is also known as discount received in advance i.e. discount received but not earned.

In such a situation, the rebate on bills discounts will be deducted from interest and discount in profit & loss account and shown as liability in the balance sheet.

Multiple choice book keeping and accountancy bills of exchange renewal of the bill retirement and renewal of a bill accounting treatment of bill transaction

At the time of the renewal of a bill, interest account is ____________ in the books of the drawee.

  1. credited

  2. totalled

  3. debited

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

In the books of Acceptor

1] Entry for Cancellation of Bill:

Bills Payable A/c ……….………….. Dr

To Drawer Personal A/c

2] Entry for part payment in cash:

Drawer’s Personal A/c……………… Dr

To Cash A/c

3] Entry for Interest Paid:

Interest A/c …………………………. Dr

To Cash A/c

4] Interest not paid:

Interest A/c …………………………. Dr

To Drawer’s Personal A/c