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 book keeping and accountancy bill of exchange (trade bill) dishonour of a bill dishonour of bills bills of exchange advantages of bill of exchange

Refusal or inability of the acceptor to pay the amount of bill is termed as _______.

  1. refusal

  2. dishonour

  3. retirement

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

Dishonour of bill happnes when the acceptor of the bill fails to make the payment on the date of maturity of the bill. Hecne, laibility of the acceptor is restored. Entries made for recording dishonour of the bill of exchange are reverse of the entries of recording drawing of the bill.

In the books of drawer:
Acceptor A/c Dr.
             To Bills Receivable A/c
(Bill dishonoured)

In the books of acceptor/drawee:
Bills Payable A/c Dr.
             To Drawer A/c 
(Bill dishonoured)

Multiple choice social science agriculture sector rural credit role of agriculture sector green revolution

Agricultural credit can be categorised on the basis of __________.

  1. purpose of credit

  2. objective of credit provider

  3. time period of credit

  4. both 'a and c'
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Agricultural credit can be categorized on the basis of both purpose of credit and objective of credit provider.
In order to fulfill the financial requirements of the agricultural sector in rural India, appropriate and specialized credit agencies are needed. Credit helped to increase the productive capacity.
Multiple choice social science agriculture sector rural credit role of agriculture sector green revolution

Credit available for a period of 15 months to 5 years is termed as __________.

  1. long-term credit

  2. short-term credit

  3. medium-term creit

  4. both 'b and c'
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Credit available for a period of 15 months to 5 years is termed as medium term credit.In order to fulfill the financial requirements of the agricultural sector in rural India, appropriate and specialized credit agencies are needed. Credit helped to increase the productive capacity.

Multiple choice social science agriculture sector rural credit role of agriculture sector green revolution

Non-institutional credit providers charge exorbitant interest rates ranging between 24% to _______.

  1. 50%

  2. 30%

  3. 26%

  4. 40%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The traditional sources of agricultural credit termed as non-institutional sources.Non-institutional credit providers charge exorbitant interest rates ranging between 24% to 50%.In order to fulfill the financial requirements of the agricultural sector in rural India, appropriate and specialized credit agencies are needed. Credit helped to increase the productive capacity.Agricultural credit can be categorized on the basis of both purpose of credit and objective of credit provider.

Multiple choice commerce performance of contract who will perform the contract performance, discharge, breach and remedies of contract business law and contract act

Demand Documentary Bill Limits _________.

  1. should be taken as a part of the permissible bank finance

  2. should be taken into account also for the purposes of receivable norms

  3. Both (a) and (b)

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

Demand Documentary Bill Limits are considered part of the permissible bank finance and must be accounted for in receivable norms to ensure accurate credit assessment.

Multiple choice elements of book keeping and accountancy trial balance develop the skill of preparing trial balance by balance method methods of preparing trial balance preparation of trial balance

Lease which includes a third party (a lender) is known as:

  1. Sale and Leaseback

  2. Direct Lease

  3. Inverse Lease

  4. Leveraged Lease
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A leveraged lease is a lease agreement that is financed through the lessor with help from a third-party financial institution. In a leveraged lease, an asset is rented with borrowed funds.

Multiple choice book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

Financial leverage is also known as ________________.

  1. Trading on equity

  2. Trading on debt

  3. Interest on equity

  4. Interest on debt
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Financial leverage, which involves using debt to increase the potential return on equity, is commonly referred to as trading on equity.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

Balance of payment on capital account deals with the borrowings or lending of the country in question (true/false)

  1. True

  2. False

  3. Cant say

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

The capital account in the balance of payments records all international transactions involving the purchase or sale of assets, including foreign borrowing and lending.

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

There is no repayment obligation in ___________.

  1. grants

  2. loans

  3. both grant and loans

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

Grants are non-repayable funds provided by one party to another, often for specific projects or development purposes. Unlike loans, there is no obligation to pay back the principal or interest.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

When saving are given as a loan and borrower repays the amount, money serves the function of  ________.

  1. unit of measurement

  2. store value

  3. standard of deferred payment

  4. medium of exchange
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Deferred payments refer to payments made on loans, salaries, pensions, insurance premium, interests, and rents. The necessary condition for deferred payment is that the amount of repaid money should be the same as it was at the time of purchase of the good or at the time of taking loan. Since all the goods and services can be expressed in terms of money, it makes the future payments easy and functional. Moreover, the value of currency does not change with time which makes it easy for the borrower to take money and repay it in future. Therefore, money serve as a standard of deferred payment. 

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

When we say that Money serves as a standard for deferred payments, we are considering the _________ aspect of Money.

  1. static

  2. dynamic

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The standard of deferred payments is considered a static function because it provides a fixed unit to settle debts and contracts, maintaining consistency in accounting.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Money is a standard of deferred payments. This means that:

  1. Future transactions can be settled In terms of money

  2. Loans given and repayments thereof can be established in terms of money

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As a standard of deferred payments, money allows for the settlement of future obligations and the formalization of credit and loan agreements.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

In case of creditor's voluntary winding up, the liquidators are appointed by __________.

  1. Members

  2. Creditors

  3. Both (A) and (B)

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

Voluntary winding up is the process in which a company is unable to carry out it operations or the period for carrying the operations expires or if it is unable to meet its financial obligations. It can carry this process either by passing special resolution or by ordinary resolution. There are two kinds of voluntary winding up. They are;

  1. Member's voluntary winding up.
  2. Creditors voluntary winding up.
Under creditors voluntary winding up declaration of solvency is not required because the company first only becomes unable to pay the liabilities. Under this, the copy of the resolution is sent to the registrar within 10 days. The liquidators are appointed by the members as well as the members of the company.

Multiple choice business organisation and correspondence partnership 4 - dissolution of a partnership firm meaning of dissolution of partnership firm modes of dissolution of firm dissolution of firm difference between realisation account and revaluation account payment of firm's debts and separate debts, realisation of assets and liabilities

When a company is wound up at the instances of either the members or the creditors, the winding up is termed as _____________.

  1. Compulsory winding up

  2. Voluntary winding up

  3. Winding up subject to supervision of court

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

Voluntary winding up is the process in which a company is unable to carry out it operations or the period for carrying the operations expires otr if it is unable to meet its financial obligations. It can carry this process either by passing special resolution or by ordinary resolution. Under creditor's voluntary winding up the board of directors are not in position to give declaration on the liability of the company. Hence, they call meeting to of creditors to wind up the company.