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Credit And Collection > Chapter 5 > Flashcards

Chapter 5 Flashcards

1
Q

documents that are used in credit transactions could be classified into 2 major types

A

those used for credit evaluation to eventually approve or diaspprove an applicant
those used to document an approved credit transaction

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2
Q

documents required for credit evaluation

A

ITR income tax returns
BS bank statements
BOD board of directors
OCT original certificate of title
SEC securities and exchange commission
FS financial statementa
DTI department of trade and industr
SN serial number
TCT transfer cert of title

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3
Q

is the credit application which must be fully accomplished

A

initial loan or credit document

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4
Q

type of applicants

A

self employed applicants
corporate applicants

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5
Q

this statement is the listing of the activities in an account, deposits, withdrawals and bank charges

A

bank statement

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6
Q

these are required for every establishments and they have to be displayes prominently in the place of business

A

DTI and business permits

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7
Q

the applicant would simply make copies of these documents, which are useful to the lender in 4 ways

A

Articles of Incorporation and By laws

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8
Q

4 ways that articles of incorporation and by laws are useful

A

to determine the corporate life
to determine if the credit application is within the powers of the corporation
to obtain more potential sources of information
to determine if the paid up equity of the corporate applicant matches the amount to be borrowed

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9
Q

without this, a corporation does not exist, and cannot transact any business of any kind whatsover

A

SEC registration

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10
Q

these are listed in the credit app

A

references

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11
Q

references may either be

A

character and trade references

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12
Q

the applicants credit history are best sourced from

A

trade references

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13
Q

some applicants are required to obtain consent from their spouses

A

proof of authorization

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14
Q

policy making body of the corporation

A

board of directors

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15
Q

other attachments are

A

copies of tax declaration
copies of tax receipts
proof of how property was acquired

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16
Q

any piece of paper on which is written words or transactions

A

document

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17
Q

documents used in the world of business could be broadly classified as

A

commercial documents

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18
Q

examples of non financial receipt

A

materials received report
warehouse receipt

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19
Q

example of financial document

A

statement of account

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20
Q

example of financial instruments

A

certificates of stock
checks
drafts
money orders

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21
Q

example of credit documents

A

credit application
credit investigator’s report

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22
Q

example of credit instruments

A

promissory notes
real estate
pledge
assignment

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23
Q

promissory note is called to

A

P/n or pronote

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24
Q

this is the most important credit instrument

A

promissory note

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25
Q

this is a mosy solid evidencw of debt

A

promissory note

26
Q

this is a document that is sold, assigned, transferred, pledged, or bought

A

promissory note

27
Q

a promissory note may either be

A

negotiable
non negotiable

28
Q

it cannot be transferred from one hand to another

A

non-negotiable

29
Q

it can be purchased, sold, or used as a collateral for a loan

A

negotiable

30
Q

is a simple acknowledgement or admission of a credit obligation

A

IOU

31
Q

the seller transfers the possession of the appliance but not its ownership

A

deed of conditional sale

32
Q

by withholding, or reserving ownership, 2 issues will arrive

A

the right of repossession
who bears the loss

33
Q

occuring by chance

A

fortuitous

34
Q

it transfers the ownership and possession of the thing bought to the buyer

A

deed of absolute sale

35
Q

if it is used in credit transaction, then it becomes a credit instrument

A

trust receipt

36
Q

it is essentially a receipt of goods for the receiver to hold in trust

A

trust receipt

37
Q

the possession of goods is transferred by the seller to the potential buyer

A

trust receipt

38
Q

in a trust receipt, the seller is called… and the holder of the goods is…

A

entruster, entrustee

39
Q

issued by a warehouse and it is not a credit instrument

A

warehouse receipt

40
Q

examples of incorporeal rights

A

certificates of shares of stocks, bonds, warehouse reveipt

41
Q

is a contract whereby the debtor secures to the creditor the fulfillment of a principal obligation, specially subjecting to such security immovable and movable property

A

mortgage

42
Q

immovable property

A

real estate mortgage

43
Q

movable or personal property

A

chattel mortgage

44
Q

a mortgage is registered in

A

registry of deeds

45
Q

means that the mortgaged property securing the unpaid and past due obligation will be sold at public auction

A

foreclosure

46
Q

this form is required in all credit transaction that charge interest

A

disclosure statement

47
Q

this is a document where the lender must show the true cost of the credit it is providing to the borrower who i turn will read and sign it

A

disclosure statement

48
Q

is preferred and the only mode of payment that will be accepted in import and export transaction

A

letter of credit

49
Q

is a check where the date js in the future

A

postdated checks

50
Q

this only value in credit evaluation is to establish the fact that the business exist

A

ITR

51
Q

explain the prrof of income and financial stability

A
52
Q

is the practice of issuing a check even if at the time of issuance there is no sufficient money in the checking account

A

kiting

53
Q

business establishments 2 sets of books

A

the official one and the in house financial statements

54
Q

this is prepared for internal use, exlusively for the owner or key executives

A

In-house

55
Q

they reflect the true financial condition of the enterprise, and are the ones to calculate capacity to pay and financial stability

A

in house

56
Q

issued by the assesors office, and this document clsssifies the property as to commercial, residential, industrial or agricultural

A

copies of tax declaration

57
Q

this docukent tells the credit evaluator whether the property was inherited, purchased, or donated

A

proof of how property was acquired

58
Q

what is needed if property is inherited

A

a deed of extra judicial partition

59
Q

what is needed if the property is purchased

A

a deed of absolute sale

60
Q

when does a document becomes intrument

A

when if confers the power to tranfer, assign, negotiate, alienate, buy or sell personal rights

61
Q

it is annotated (written or type) at the back of the borrowers title or the registry papers of the vehicle

A

mortgage

Credit And Collection (7 decks)

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