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 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

Who is treated as liquidator in Creditors' voluntary winding up?

  1. Person appointed by member

  2. Person appointed by creditors

  3. Person appointed by court

  4. Person appointed by directors
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 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 commercial applications generally accepted accounting principles (gaap) acccounting cycle meaning, need and objectives of accounting accounting process

A person who is unable to pay his debts, is called_______. 

  1. insolvent

  2. solvent

  3. well to do

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

A person or firm whose liabilities exceed the value of owned assets is termed as insolvent. It is the inabilities of the company or person to pay liabilities as they become due. 

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

What rate of commission is charged by the bank issuing the credit card?

  1. 1% to 3%

  2. 3% to 6%

  3. 2% to 5%

  4. 1% to 4%
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The bank issuing the credit card charges a commission from anywhere between 1% to 4% for each such transaction. The commission charged is immediately debited to the seller's bank account.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Interest receivable from Mohan ( a Borrower) Account is -

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest receivable from Mohan is an accrued income for the business, it is treated as an Asset.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Interest received in advance from Mohan (a borrower) Account is _________________.

  1. An Asset Account

  2. A Liability Account

  3. A Revenue Account

  4. An Expense Account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Interest received in advance is income that has been collected but not yet earned. Until the service is provided, it remains an obligation to the business, classified as a liability.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which account is odd one out?

  1. Provision for Doubtful Debts A/c

  2. Provision for Discount on Debtors A/c

  3. Reserve for Discount Creditors A/c

  4. Provision for Depreciation Account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The first three are provisions/reserves related to debtors or creditors. Provision for depreciation is related to fixed assets.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which account is the odd one out?

  1. Advance to supplier

  2. Bills Receivable

  3. Debtors

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

Advance to supplier, bills receivable, and debtors are all receivables (assets). Cash is a liquid asset, but the others are specifically receivables.

Multiple choice elements of book keeping and accountancy ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Which account is the odd one out?

  1. Interest Received A/c

  2. Interest Receivable A/c

  3. Interest Outstanding A/c

  4. Unaccrued Interest A/c
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Interest received is a nominal account (revenue). The others are representative personal accounts (accruals/deferrals).

Multiple choice elements of accounts ledger and posting develop the understanding for posting of transactions and balancing of accounts classification of ledger (subdivision of ledger) and balancing of account meaning and importance of ledger

Interest A/c will have ________.

  1. Debit balance

  2. Credit balance

  3. Nil

  4. Debit or credit balance
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Interest may have both the accounting treatment. If interest is received , its an income to the business and if interest is paid, its an expenses for the business. 

Hence, interest account may have debit or credit balance.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Annuity, where the payments start after specified no. of periods, is known as

  1. Immediate Annuity

  2. Deferred annuity

  3. Contingent annuity

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

An annuity which begins payments only after a period is a deferred annuity
Annuity, where the payments start after specified no. of periods, is known as Deferred annuity.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Which of the following is an example of annuity contingent ?

  1. Car Loan

  2. House Loan

  3. Daughter's Marriage

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
$\Rightarrow$  $Daughter's\,\,Marriage$ is an example of annuity contingent. 
$\Rightarrow$  Annuity contingent is an annuity arrangement in which the beneficiary does not begin receiving payments until a specified event occurs.
 $\Rightarrow$  A contingent annuity may be set up to begin sending payments to a beneficiary upon the death of another individual who wishes to ensure financial stability for the beneficiary, or upon retirement or disablement of the beneficiary.
$\Rightarrow$  Car loan and House loan is not an example of annuity contingent, it's an example of annuity certain.
Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

What is true about Annuity Due ?

  1. It is an annuity in which payments are made at the end of each payment period.

  2. It is an annuity in which payments are made at the beginning of each payment period.

  3. It is an annuity in which payments are made in the middle of each payment period.

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

$\Rightarrow$   True statement about Annuity Due is,

$-It\,is\,an\,annuity\,in\,which\,payments\,are\,made\,at\,the\,beginning\,of\,each\,payment\,period.$
$\Rightarrow$  Annuity due is an annuity whose payment is to be made immediately at the beginning of each period. 
$\Rightarrow$  A common example of an annuity due payment is rent, as the payment is often required upon the start of a new month as opposed to being collected after the benefit of rent has been received for an entire month.
$\Rightarrow$  All payments are in the same amount.
$\Rightarrow$  All payments are made at the same intervals of time

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Which of the following is true about Annuity Contingent ?

  1. It is made till the happening of an event.

  2. It is made for fixed number of intervals of time.

  3. Loans for home comes under it

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

$\Rightarrow$  True statement about Annuity contingent is $It\,is\,made\,till\,the\,happening\,of\,an\,event.$

$\Rightarrow$  An annuity arrangement in which the beneficiary does not begin receiving payments until a specified event occurs. 
$\Rightarrow$  A contingent annuity may be set up to begin sending payments to a beneficiary upon the death of another individual who wishes to ensure financial stability for the beneficiary, or upon retirement or disablement of the beneficiary.