Chapter 5

Question 1

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

Answer 1

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

Question 2

documents required for credit evaluation

Answer 2

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

Question 3

is the credit application which must be fully accomplished

Answer 3

initial loan or credit document

Question 4

type of applicants

Answer 4

self employed applicants
corporate applicants

Question 5

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

Answer 5

bank statement

Question 6

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

Answer 6

DTI and business permits

Question 7

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

Answer 7

Articles of Incorporation and By laws

Question 8

4 ways that articles of incorporation and by laws are useful

Answer 8

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

Question 9

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

Answer 9

SEC registration

Question 10

these are listed in the credit app

Answer 10

references

Question 11

references may either be

Answer 11

character and trade references

Question 12

the applicants credit history are best sourced from

Answer 12

trade references

Question 13

some applicants are required to obtain consent from their spouses

Answer 13

proof of authorization

Question 14

policy making body of the corporation

Answer 14

board of directors

Question 15

other attachments are

Answer 15

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

Question 16

any piece of paper on which is written words or transactions

Answer 16

document

Question 17

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

Answer 17

commercial documents

Question 18

examples of non financial receipt

Answer 18

materials received report
warehouse receipt

Question 19

example of financial document

Answer 19

statement of account

Question 20

example of financial instruments

Answer 20

certificates of stock
checks
drafts
money orders

Question 21

example of credit documents

Answer 21

credit application
credit investigator’s report

Question 22

example of credit instruments

Answer 22

promissory notes
real estate
pledge
assignment

Question 23

promissory note is called to

Answer 23

P/n or pronote

Question 24

this is the most important credit instrument

Answer 24

promissory note

Question 25

this is a mosy solid evidencw of debt

Answer 25

promissory note

Question 26

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

Answer 26

promissory note

Question 27

a promissory note may either be

Answer 27

negotiable non negotiable

Question 28

it cannot be transferred from one hand to another

Answer 28

non-negotiable

Question 29

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

Answer 29

negotiable

Question 30

is a simple acknowledgement or admission of a credit obligation

Answer 30

IOU

Question 31

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

Answer 31

deed of conditional sale

Question 32

by withholding, or reserving ownership, 2 issues will arrive

Answer 32

the right of repossession who bears the loss

Question 33

occuring by chance

Answer 33

fortuitous

Question 34

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

Answer 34

deed of absolute sale

Question 35

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

Answer 35

trust receipt

Question 36

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

Answer 36

trust receipt

Question 37

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

Answer 37

trust receipt

Question 38

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

Answer 38

entruster, entrustee

Question 39

issued by a warehouse and it is not a credit instrument

Answer 39

warehouse receipt

Question 40

examples of incorporeal rights

Answer 40

certificates of shares of stocks, bonds, warehouse reveipt

Question 41

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

Answer 41

mortgage

Question 42

immovable property

Answer 42

real estate mortgage

Question 43

movable or personal property

Answer 43

chattel mortgage

Question 44

a mortgage is registered in

Answer 44

registry of deeds

Question 45

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

Answer 45

foreclosure

Question 46

this form is required in all credit transaction that charge interest

Answer 46

disclosure statement

Question 47

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

Answer 47

disclosure statement

Question 48

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

Answer 48

letter of credit

Question 49

is a check where the date js in the future

Answer 49

postdated checks

Question 50

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

Answer 50

ITR

Question 51

explain the prrof of income and financial stability

Question 52

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

Answer 52

kiting

Question 53

business establishments 2 sets of books

Answer 53

the official one and the in house financial statements

Question 54

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

Answer 54

In-house

Question 55

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

Answer 55

in house

Question 56

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

Answer 56

copies of tax declaration

Question 57

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

Answer 57

proof of how property was acquired

Question 58

what is needed if property is inherited

Answer 58

a deed of extra judicial partition

Question 59

what is needed if the property is purchased

Answer 59

a deed of absolute sale

Question 60

when does a document becomes intrument

Answer 60

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

Question 61

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

Answer 61

mortgage