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Quiz > Credit and Collection (Finals) > Flashcards

Credit and Collection (Finals) Flashcards

1
Q

2 Methods in appraising Chattels

A

Market Value Approach
Cost Approach

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2
Q

It is composed of more than 200 member – companies from the banking and trade, manufacturing, financing and insurance communities.

A

Credit Management Association of the Philippines (CMAP)

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3
Q

Frequency of purchase or other circumstances may make it necessary for certain special treatment of individual cases.
- Usually utility bills such as electricity, water, internet

A

End of the Month (EOM)

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4
Q

which is automatically considered tha appraised value and 50% will be the loan value

A

Secondhand Value

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5
Q

3 Types of Business Organization

A

Single Proprietorship
Partnership
Corporation

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6
Q

property assigned to the third party can also be offered as collateral.

A

Deed of Assignment

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7
Q

2 Other Cash Terms

A

End of the Month (EOM)
Discounts

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8
Q

Type of debtor does not pay on
time because he finds it difficult to part with his money

A

Uncooperative and Indifferent Debtor

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9
Q

2 Types of Discounts

A

Cash Discount
Trade Discount

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10
Q

these are the stock whose prices are quoted and transacted through electronic market such as PSE.

A

Listed Stock

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11
Q

these are properties consist of fixed or immovable properties
under the generic name term “Land”

A

Real Estate

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12
Q

it is initially started when a prospective borrower
applies for a loan.

A

Personal Interview

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13
Q

this entails the gathering of current sale price or market values of the chattel being appraised.

A

Market Value Approach

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14
Q

it is the gathering of available information about the
applicant.

A

Credit Information

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15
Q

Collection records must be kept and maintained and should indicate when notices were sent

A

Enforcement

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16
Q

It is a kind of letter which is formal and unusual, when a delinquent debtor receives letter on his account, he may be facing serious immediate attention and action

A

Registered Letter

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17
Q

Whether the investigation is a routine matter or a special case and the purpose is general or specific.

A

Purposes and Types of Investigation

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18
Q

Sound credit management principles dictate the result must
be evaluated against company policies and procedures.

A

Evaluation

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19
Q

It is a complex process known as credit checking or credit granting.

A

Financial Analysis

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20
Q

this groups consists of individuals and business entities that are conscious of their financial obligation which they discharge
promptly without the need of being reminded about them

A

Prompt Payer

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21
Q

Which is by far is the principal C of credit represents a good
moral risk

A

Confidence

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22
Q

2 Alternative Approaches to Credit Rating

A

Inward Approach
Outward Approach

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23
Q

2 Types of Valuation

A

Firsthand Value
Secondhand Value

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24
Q

It is to ascertain the actual existence of the property used to
determine its exact location and to look into its actual condition

A

Inspection

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25
Q

It is not merely poor prospect for business, no prospect at all.
He will shun the creditor, if only from a sense of personal embarrassment

A

Delinquent Debtor

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26
Q

It is used to inform delinquent debtor of the consequence that will befall upon him when the case is brought to court.

A

Demand Letter

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27
Q

It is the stability of the country which pertains to the risk of
exchange must also be taken into account

A

Currency

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28
Q

The nature of the commodity generally circumscribes the terms of sales such as: Cash Basis, Installment Basis, and Deferred Payment

A

Commodity as Factor

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29
Q

It is situated along the busiest section in town, district, or cities.

A

Commercial Land

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30
Q

4 Qualities of a Good Bill Collector

A

Industry
Persistence
Tact
Resourcefulness

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31
Q

8 Qualities of a Good Collection Letter

A
  1. short and direct
  2. use dated action
  3. written from the customer’s viewpoint
  4. not provide any cause oor occasion to arouse the anger and bitterness of the customer
  5. revised periodically
  6. humanistic approach
  7. follow a definite pattern
  8. written in such a way as to make it appear as if it were the last to be sent to the debtor
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32
Q

3 Main Themes of CMAP

A
  1. To inculcate credit consciousness
  2. To place the credit men as a professional
  3. To infuse credit discipline
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33
Q

A big-time syndicate, who victimize business firms involving large sums of money

A

Credit Fraud

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34
Q

It measures or specify the credit period when payment will be made. It measures a credit period.

A

Term

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35
Q

(Statement of Changes in Owner’s Equity)

A

Reconciliation of the capital accounts and summary changes.

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36
Q

It evolves from an unwritten set of standards, sometimes very
nebulous, to more specific criteria covering the condition under which loans are made.

A

Credit Policy

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37
Q

which depicts the financial condition of the business firm
at the end of a specified period.

A

Balance Sheet

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38
Q

came from an old French ”Capitalae” meaning movable property

A

Chattel

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39
Q

willingness to discharge financial obligation

A

Character

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40
Q

It is an effective medium in collecting debts, it gives the opportunity to talk personally.

A

Telephone Calls

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41
Q

3 Most Common Types of Corporation

A

Public and Private
Stock and Non-Stock
Domestic and Foreign

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42
Q

summary form a breakdown of the financial statement of the
company, reflecting its latest financial condition and the result of operation for the past three or five years.

A

Financial Condition

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43
Q

Refers to compensating consideration purposely intended to shield the interest from bad debts

A

Collateral

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44
Q

It is the maximum amount of credit which may be permitted to remain outstanding on account

A

Quantitative Credit Limit

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45
Q

It covers the complete business records such as the date of
incorporation, type of business organization, record of registration with the proper authorities, the names of incorporators and the summary of operating records.

A

Company’s Background / History

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46
Q

2 Types of Credit Rating Agencies

A

a. Agencies that provide credit information with regard to businessmen and companies.

b. Agencies that provide credit information with regard to individual purchaser.

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47
Q

This type of debtor always exhibits an air of defiance.

A

Pugnacious Debtor

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48
Q

statement which summarizes the
financial operation over a period of time.

A

Income Statement

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49
Q

3 Scope of Credit Policy

A

Credit Terms
Credit Period
Credit Limit

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50
Q

Internal Sources of Information (5)

A
  1. Debtor’s previous record with the business firm.
  2. Credit man’s personal knowledge of debtor’s character and reputation.
  3. Personal Contacts with debtor.
  4. Analysis of debtor’s financial statement.
  5. Audits or surveys of the business.
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51
Q

It adopts a system of gathering and putting every information about customer and application into a folder which is filed in proper order.

A

Credit File

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52
Q

5 Benefits from Collection Effort

A
  1. Reduction in the volume of account receivable.
  2. Freeing capital for business operations.
  3. Increasing profts through decreasing expenses.
  4. Shortening of credit period.
  5. Establishing a line of customer who are financially sound.
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53
Q

From the Credit Management Association of the Philippines (CMAP)data on court cases could be gathered information about the subject’s involvement in, not only collection and other civil cases, but also criminal cases as well.

A

Court Cases

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54
Q

refers to the bonus offered to induce the earlier payment of
the bill.

A

Discounts

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55
Q

The scope depends on such factors since the report must be finished on the date it is needed by the requesting bank.

A

Time and Resource Constraints

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56
Q

5 Classifications of Land

A

Commercial Land
Residential Land
Industrial Land
Agricultural Land
Raw Land

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57
Q

3 Different Types of Delinquent Debtor

A

I. Fair Credit
- Careless Borrower
- Complainer
- Unforseen Problems

II. Slow Credit
- Poor Manager
- Marital Problems
- Coward

III. No Good Credit
- Live beyond his income
- Gypsy
- Crook

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58
Q

It includes time when payment has been made and discounts if any, that will be allowed for prompted payment.

A

Credit Terms

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59
Q

Are those companies which have stable operation, good
management, and usually yield handsome dividend very regularly

A

Prime Stock

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60
Q

the appraiser should not only determine the actual condition but its use.

A

Usage

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61
Q

Enumerate Factors in Fixing Term: (6)

A
  1. Commodity as Factor
  2. Geographic Consideration
  3. Seasonal Dating
  4. Terms on Retail Trade
  5. Standing of Customer
  6. Cash Terms
62
Q

It is also another bases of credit, relationship between the credit
and the debtor.

A

Connection

63
Q

It is tasked and responsible with the responsibility of gathering all credit information about the applicant and assembling them in such a way that they could be helped in properly guiding in their assessment and analysis for the purpose of establishing credit rating.

A

Credit Department

64
Q

Type of debtor does not deny the existence of his obligation which arouse from previous transaction neither shun away from the presence of bill collector.

A

Politician Type

65
Q

This is due to the observation that research men engaged in the collection of needed information enjoy a certain latitude of freedom from any bias or prejudice.

A

Market Sales Department

66
Q

refers to the willingness of the seller to deliver goods to their valuable customers even in the absence of promise to pay.

A

Cash on Delivery (COD)

67
Q

2 Types of Stock according to stock value

A

Listed Stock
Prime Stock

68
Q

It has been described as a “Decision in Advance”.

A

Credit Policy

69
Q

Ability to conduct business efficiency, effectively and profitably.

A

Capacity

70
Q

Term will only effect after the said ‘R.O.G” which means Receipt on Goods.

A

Geographic Consideration

71
Q

This may be considered as synonymous with need for
achievement or nACH for short

A

Resourcefulness

72
Q

7 Bases of Credit

A

Character
Capacity
Capital
Collateral
Currency
Confidence
Connection

73
Q

It is in favored position, if properly instructed, to collect an immense wealth of information about the applicant which perhaps is scarcely available elsewhere.

A

Salesman as sources of credit

74
Q

3 Types of Properties

A

Real Estate
Chattel
Share of Stocks

75
Q

it is the price paid for the early payment of funds.
- It arises where the terms allow the buyer to pay on a certain date,
net, or prior thereto less discounts.

A

Cash Discount

76
Q

Factor of terms which the seller recognizes the distant location of the buyer and make concession in the matter of terms.

A

Geographic Consideration

77
Q

Refers to capital goods that are used in the further production of
more goods.

A

Capital

78
Q

Meaning of Sine Qua Non

A

absolute essential

79
Q

whose main task revolve around inspection of property and its evaluation where credit is requested by a prospective borrower from the bank.

A

Appraiser

80
Q

one who possibly avoid offending the delinquent debtor while
making collection for the company.

A

Tact

81
Q

it is a stock which entitles the holder to an equal pro –
rate division of profits.

A

common stock

82
Q

It involves a thorough study and understanding of financial facts recorded in the balance sheet, income statement, trial balance and separate schedules.

A

Financial Analysis

83
Q

5 Reasons of Bad Debts

A
  1. The debtor - customer has become declared insolvent.
  2. Customer is stubborn to settle obligation.
  3. The inability to locate the whereabouts of the debtor
  4. The business has ceased opeation for several years.
  5. The untimely demise of the customer leaving obligation behind which the heir refused to honor and settle.
84
Q

2 Types of Cash Terms

A

Cash Before Delivery (CBD)
Cash On Delivery (COD)

85
Q

Whether the amount is big or small

A

Amount Involved

86
Q

refers to the customers having doubtful character or capacity to pay.

A

Standing of Customer

87
Q

This letter usually initiates an offer to the debtor to help him in his predicament by explaining it together not to misunderstood some consequences.

A

Discussion Letter

88
Q

the “regular terms” of trade usually apply to shipments of order received for delivery at once.

A

Seasonal Dating

89
Q

Whether the client is new or an established one. A past-due account or valued one.

A

Client Classification

90
Q

It emphasizes on industry conditions, plans, forecast, and general outlook.

A

Outward Approach

91
Q

Has there been any previous relationship established in the past

A

Bank’s Experience with the Subject

92
Q

A debtor who is not hesitate himself to settle his
financial obligation.

A

Cooperative Debtor

93
Q

This is beyond question and most difficult part is to write. Failure on the part of the writer to prevent offending the customer causes
more harm than good.

A

Collection Letter

94
Q

A creditor is forced to bring to the attention of a debtor about his existing obligation to the company.

A

Reminder Letter

95
Q

It imposes certain requirements which a borrower or prospective debtor must comply with before he could grant credit

A

Temporal Credit Limit

96
Q

2 Other Information

A

Personal Interviews
Ocular Inspection

97
Q

An interview with the seeker of credit may be followed by conducting an actual observation or visitation to plant, equipment and other asset which are offered as collateral security.

A

Ocular Inspection

98
Q

Type of debtor who feel they are on top of the world even when world is crumbling to pieces. Psychologist call them as the
”Paranoid.”

A

Paranoiac

99
Q

A written communication which refers to an indebtedness, much care must be taken to avoid liability under the law against libel and blackmail.

A

Telegrams

100
Q

it may be described as any representation of financial data
from accounting records.

A

Financial Statement

101
Q

it brings commensurate rewards

A

Industry

102
Q

are those who pay their obligation promptly and religiously

A

Good Payer

103
Q

It is to evaluate the property subject to inspection and appraisement to arrive at
its fair market value based on the existing condition.

A

Objective of Inspection or Appraisal

104
Q

it refers to the performance of the property when put into use.

A

Condition

105
Q

It may be described simply as that company which gathers and distributes information about the credit position of individuals, firm, and corporation.

A

Credit Agencies

106
Q

The time element, which involves the determination as to when payment shall be made commonly known as _______/

A

Bill on terms

107
Q

2 Types of Credit Limit

A

Quantitative Credit Limit
Temporal Credit Limit

108
Q

2 Classifications of Stocks

A

Common Stocks
Preferred Stock

109
Q

The discount may be an allowance offered at the end of the given period for the purchase in excess of its stipulated amounts.
- It is distinctly an element of price.

A

Trade Discount

110
Q

It is situated in areas that are exclusively reserved and used for factories, plants, and mill which are heavily concentrated in such places.

A

Industrial Land

111
Q

It refers to dishonest firms and individuals are known by various
names and employ various trick

A

Credit Fraud

112
Q

tender partial payment from time to time in accordance with the agreement between sellers and buyers.

A

Terms in Retail Trade

113
Q

3 Examples of Chattels

A

Machinery and Equipment
Motor Vehicles
Inventories

114
Q

5 Purposes of Credit Investigation

A
  1. Purposes and Types of Investigation
  2. Company Credit Policy
  3. Client Classification
  4. Amount Involved
  5. Time and Resource Constraints
115
Q

It is a letter at certain fundamental characteristic of human nature, his soft spot such as making him conscious of the impact of his delinquency on his integrity and reputation.

A

Appeal Letter

116
Q

it is a twin brother of industry, it will never tired and afraid
of making repeat calls until amount due to the company is settled.

A

Persistence

117
Q

are conducted by the bank through its credit investigators

A

Inspection

118
Q

another important phase of credit which is to get money due to the company

A

Collection Policies

119
Q

6 Services offered by CMAP

A

Quarterly survey of credit and collection bureau
Listing of Overdue Account
Listing of Court Cases
Listing of Return Checks
Listing of Corporation and Partnership
Ledger Interchange

120
Q

7 Elements of Collection Effort

A
  1. Collection
  2. Timing
  3. Be selective in your clientele
  4. Employ well
  5. Maintain a continuity of human relationship once established
  6. Tell the story of your bank to your community at every opportunity.
  7. To admit that you have a collection problem in your hands.
121
Q

7 Types of Collection Letter

A

Reminder Letter
Discussion Letter
Appeal Letter
Demand Letter
Registered Letter
Telephone Calls
Telegram

122
Q

It applies to transactions in which the seller receives the cash payment as a condition to deliver goods

A

Cash Before Delivery (CBD)

123
Q

another way of classifying debtor is according to their paying habits.

A

Paying Habits

124
Q

6 Important Documents that an appraiser should be able to look into and verify:

A

Sales Invoice
Letter of Credit
Deed of Assignment
Condition
Usage
Valuation

125
Q

It is the length of time within which a customer is expected to
remit in partial or full.

A

Credit Period

126
Q

It appears in its natural state which remains idle and
undeveloped.

A

Raw Land

127
Q

It is used for the nearest the objective rule.

A

Cost Approach

128
Q

These are planted crops and intended for agricultural
production.

A

Agricultural Land

129
Q

3 Sound Credit Management

A

Estimation
Enforcement
Evaluation

130
Q

through this document the appraiser will be able to check
who is the legal owner of the property and from whom it was bought.

A

Sales Invoice

131
Q

it is a stock which entitles the holder to some preference over some other class of stockholder.

A

Preferred Stock

132
Q

refers to the goods delivered to the buyer only when the seller obtains receipts of funds corresponding to value of goods ordered.

A

Cash Terms

133
Q

3 Fundamental of Financial Statement

A

Balance Sheet
Income Statement
Reconciliation of the Capital accounts and summary changes

134
Q

The credit investigator concentrates on the size and degree of fluctuation on borrowings as well as the nature of the security
pledged to secure the loan.

A

Dealings with the Government Lending Agencies

135
Q

are those who take time to pay, or more, are those who try to avoid meeting their obligation.

A

Slow Payer

136
Q

It is used as the maxima of credit or the value that a customer
can obtain from the firm

A

Credit Limit

137
Q

It is a man who occupies a very important position in the structure of the credit economy and yet is little known and least talked about outside the world in which he lives

A

Credit Manager

138
Q

It can provide a basis for the computation of the value
based on its landed costs.

A

Letter of Credit

139
Q
A
140
Q

it is situated purely or exclusive section of town, district, or city.

A

Residential Land

141
Q

2 Classification of Debtor

A

Good Payer
Slow Payer

142
Q

9 Types of Debtors

A

Cooperative Debtor
Chronic Complainer
Politician Type
Uncooperative and Indifferent Debtor
Paranoiac
Pugnacious Debtor
Elusive Debtor
Prompt Payer
Delinquent Debtor

143
Q

This task is performed by the bank’s credit investigator who
has, as his main objective, the verification as well as evaluation of the applicant’s
character, etc.

A

Credit Investigation

144
Q

after deducting depreciation will be the appraised value and 50% of such depreciation will be the loan value.

A

Firsthand Value

145
Q

the basis of the credit decision.

A

Credit Analysis

146
Q

All available resources of credit information must be tapped
and utilized so that a proper estimation of the credit risk can be obtained.

A

Estimation

147
Q

Receive an order in advance which is to be shipped at a certain date.

A

Seasonal Dating

148
Q

Whether the policy is a conservative or liberal one,
and whether it requires a comprehensive investigation of cases, or representative sampling would suffic

A

Company Credit Policy

149
Q

– those who are generally the product of their fertile
imagination.

A

Chronic Complainer

150
Q

It emphasizes a firm’s financial performance and its asset position as a specified dated. The main trust of this approach is on capacity.

A

Inward Approach

151
Q

Type of debtor who are as elusive as an eel, thay are different to find.

A

Elusive Debtor

152
Q

External Sources of Infomation (6)

A
  1. Mercantile Agencies
  2. Trade References
  3. Banks
  4. Newspaper clippings
  5. Court Cases
  6. Report from competitors of the borrowers.

Quiz (5 decks)

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