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 accountancy accounting for bills of exchange transaction nature, advantages and types of cheques meaning, definition and characteristics of promissory note promissory note

A Promissory Note or Bill of Exchange can be made payable ___________.

  1. On demand

  2. On a specified date

  3. After a specified period - months or days

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

Promissory notes and bills of exchange can be drawn payable on demand, on a specific future date, or after a certain period of time (usance).

Multiple choice

to lend; to loan

  1. pagar

  2. pobre

  3. prestar

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

The Spanish verb for 'to lend' is 'prestar'. 'Pagar' means to pay, 'pobre' means poor, and 'costar' means to cost.

Multiple choice political science national integration diverse democracy diversity unity and diversity in india community and community development community development national symbols our national symbols

When a financial emergency is proclaimed _____________________.

  1. A repayment of government debts will stop

  2. Payment of salaries to public servants will be postponed.

  3. Salaries and allowances of any class of employees may be reduced

  4. Union budget will not be presented.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Article 360 of the Constitution of India provides for the provision as to financial emergency. It provides for a provision that the President during the period of Proclamation of emergency issue directions for the reduction of salaries and allowances of all or any class of persons serving in connection with the affairs of the Union including the Judges of the Supreme Court and the High Court.

Multiple choice business organisation import and export procedure types of foreign trade exports and imports nature and scope of foreign trade

Reliance on other countries and international organizations for financial support is called ___________.

  1. foreign loan

  2. international borrowing

  3. external debt trap

  4. external assistance
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

External assistance refers to the support received from other countries or international organizations, which can include grants, loans, or technical aid.

Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

The owner and persons advancing loans to the business would have __________ stakes.

  1. Monetary

  2. Non monetary

  3. Legal

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

Owners and persons advancing loans to the business are the person who contributes capital into business. These persons invest money in some business. Therefore, the owner and persons advancing loans to the business would have monetary stakes.

Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

_________ is interested in adequacy of profits only as an assurance of return of principal and interest back in time.

  1. Government

  2. Bank

  3. Owner

  4. Creditor
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bank is interested in adequacy of profits only as an assurance of return of principal and interest back in time. Bank is equally concerned about the form in which the assets are held by the business. When more assets are held in cash or near cash form, the aspect is known as liquidity.

Multiple choice elements of accounts accounts from incomplete records stakeholders and their information requirements ascertainment of profit and loss calculation of profit or loss under single entry system of accounting and statement of affairs accounts from incomplete records - single entry system

Which of the following amounts shall be credited to Investor Education and Protection Fund, if they remain unpaid/unclaimed for seven years from the date they become due?

  1. Matured debentures of a company

  2. Tax arrears

  3. Proceeds of sale property

  4. Provision for doubtful debts
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Investor Education and Protection Fund (IEPF) is for promotion of investors’ awareness and protection of the interests of investors.

Investor Education and Protection Fund (IEPF) has been set-up under Section 205C of the Companies Act, 1956 by way of the Companies (Amendment) Act, 1999.  As per the Act, the following amounts which have remained unclaimed and unpaid for a period of seven years from the date they became due for payment shall be credited to the IEPF:-
 (a) Unpaid dividend accounts of the companies;
 (b) The application moneys received and due for refund; 
(c) Matured deposits;
 (d) The interest accrued in the amounts referred to in clauses (a) to (d);
 (e) matured debentures;
 (f) Grants and donations by the Central Govt., State Govt., companies or any other institutions ;
 (g) The interest or other income received out of the investments made from the fund.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

The provision for discount on debtors is calculated on the amount of debtors ______________.

  1. before deducting the provision for doubtful debts

  2. left after deducting the provision for doubtful debts

  3. before deducting the actual bad debts and the provision for doubtful debts

  4. that is available at the time of calculating provisions
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Provision for discount on debtors is calculated on the net amount of debtors, which is the total debtors minus the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Debtor's A/c shows debit balance.

  1. True

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

An asset is a resource with economic value that will provide benefit in future. Debtors are an assets for organisation because they will provide cash in future. All assets have debit balance according to real account rule. That's why Debtors's a/c shows debit balance. 

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Provision for doubtful debts is _________________.

  1. Debited to Sundry Debtors Account

  2. Credited to Sundry Debtors Account

  3. Debited to Bad Debts Account

  4. Debited to Profit & Loss Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. Later, when you identify a specific customer invoice that is not going to be paid, eliminate it against the provision for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

Rebate on bills discounted is shown in the Balance Sheet as _______.

  1. Advances

  2. Other liabilities and provisions

  3. Other income

  4. Reserves & surplus
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option B is correct one.

Rebate on Bills Discounted is also known as Discount Received in Advance, or, Unexpired Discount or, Discount Received but not earned. In bank balance sheet it shown under the head Other liability and provision.


Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

___________ are those debtors who may pay but business firm isi not sure about the collection of full amount from them.

  1. Good Debts

  2. Bad Debts

  3. Doubtful Debts

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

Option C is correct. A debtor is a person that owes money to business due to sale of goods or services on credit. Doubtful debts are those debtors that might become a bad debt in future. 

Business is not sure about the collection of amount. In this case, a reserve is created known as reserve for doubtful debts.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

__________ are those debtors from where collection of money is not possible and amount given as a credit is certain loss.

  1. Good Debts

  2. Bad Debts

  3. Doubtful Debts

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

Bad Debt is a debt which is not collectible and is worthless to the Creditor. It is usually a product of the debtor which has gone for bankruptcy. Bad Debts can also occur when the collection cost is more than the amount of the debt.

Multiple choice accountancy provisions and reserves reserves provisions provision and reserves

__________ are those from where collection of debt is certain.

  1. Good Debts

  2. Bad debts

  3. Doubtful Debts

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

Option A is correct one.

Anyone having borrowed money or goods from another owes a debt and is under obligation its certain to return the goods or repay the money, usually with interest.