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 commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Bad debt recovered is _______________.

  1. Real Account

  2. Personal Account

  3. Nominal Account

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

 Bad debt recovery is a payment received for a debt that was written off and considered uncollectible. The receivable may come in the form of a loan, credit line, or any other accounts receivable. Because it generally generates a loss when it is written off, bad debt recovery usually produces income.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Provision for Discount on Debtors Account is ______________.

  1. Personal A/c

  2. Real A/c

  3. Nominal A/c

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

Personal accounts are related to transactions with the debtors and creditors, hence provision for discount on debtors is a personal A/c.

Multiple choice commercial applications accounting procedures - rules of debit and credit golden rules of debit and credit (traditional approach) types of account meaning and classification of accounts

Which of the following is nominal account ?

  1. Bills payable

  2. Bills receivable

  3. Debtors

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

Nominal accounts in accounting are the temporary accounts, such as the income statement accounts. In other words, nominal accounts are the accounts that report revenues, expenses, gains, and losses. They are closed at the end of each accounting year. This means that their account balances are transferred to a permanent account. This closing process allows the nominal accounts to start the next accounting year with zero balances. 

Stationary is classified as a nominal account, as it is an expense.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Which of the following is included in factor payments?

  1. Rent and also royalty

  2. Interest

  3. Profits

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

Factor payments include Interest, Profits, Rent and also royalty

There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Factor remunerations are the payments made by the consumer to purchase services from a firm.

  1. True

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

Factor remuneration refers to the payments which are done by the production sector to the private sector for hiring factor service i.e. capital, labour, land, and entrepreneurship in the form of interest, wages, rent, and profits respectively. 

Multiple choice organization of commerce and management entrepreneurship opportunities for an entrepreneur small business and enterprises entrepreneurship development

Which of the following is way of funding social entrepreneurs?
I.   Loan Guarantees
II.  Quasi-equity debt
III. Pooling
Select the correct answer from the option given below -

  1. I

  2. II

  3. III

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

The innovative methods used in social enterprises to broaden the access of capital includes:-

Loan Guarantee:- It is a type of finance in which one party promises to assume the debt obligation of the borrower if the borrower defaults.
Quasi- equity Debt:- It is a type of financing which posses both the characteristics of debt and equity.
Polling:- It is a type of financing where there is grouping of resources for the purpose of maximum advantage or minimum risk.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Which one of the following statements is correct? When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would ______________.

  1. improve liquidity

  2. reduce liquidity

  3. have no effect on liquidity

  4. improve financial position
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Creditors' velocity refers to how quickly a firm pays its creditors, while debtors' velocity refers to how quickly it collects from debtors. Changes in these relative speeds affect working capital management but do not inherently change the liquidity position of the firm in a direct, predictable way.

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Banks charge a higher interest rate on loans than what they offer on __________.

  1. withdrawals

  2. deposits

  3. loans

  4. demand drafts
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
  • The interest charged by the bank from its borrowers is higher than the interest it pays to its depositors.
  • The difference between the interest paid by the bank to its depositors and interest paid by the borrowers to the bank is the income of the bank.
Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

 Which one of the following statement is incorrect about Reverse Mortgage? 

  1. It is a kind of loan through which one can get cash flow serially in return for pledging a property to a bank.

  2. It is the conveyance of an asset by a borrower to a lender as security for a loan.

  3. This scheme originated in the USA.
  4. The eligibility criteria set by the RBI states that the person should be above $60$ years of age and own a home to avail this mortgage.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The policy was implemented in India in 20072007 with the objective of providing financial security to the senior citizens who own a house. This functions just opposite to the case of 'mortgage' while borrowing money from bank to buy a housei.e., the beneficiary borrows a lump-sum loan by mortgaging his/her house and the loan is repaid in equal monthly installments (EMIs). In case the beneficiary dies before clearing the dues. his/her kins may repay the rest amount of the loan and own the house.