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CREDIT AND COLLECTION > Module 2 > Flashcards

Module 2 Flashcards

1
Q

As to acceptability

A
  1. Credit of general acceptability
  2. Credit of limited acceptability
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2
Q

Includes those forms of credit which all persons within a country are willing to take in payment for goods delivered or services rendered

A

Credit of general acceptability

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3
Q

Issued under such condition as to make them as acceptable means of payment only within a restricted field. They include the promissory note, the bill of exchange, various forms of bank credit and the open book account

A

Credit of limited acceptability

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4
Q

As to term of loan

A
  1. Demand Loan
  2. Time-Loan
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5
Q

No definite maturity date, the borrower or debtor must be ready because the creditor can get the necessary payment any time

A

Demand Loan

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6
Q

Loans which have definite maturity dates

A

Time-Loan

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7
Q

Payable within or on 1 year

A

Short-term loan

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8
Q

Often 1 year but not more than 5 years

A

Medium-term Loan

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9
Q

Payable after 5 years or more

A

Long-term Loan

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10
Q

As to form of loan

A
  1. Direct Loan
  2. Discount
  3. Overdraft
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11
Q

The lender may give to the borrower the EXACT AMOUNT as contained in the promissory note. Interest will be paid at the maturity date or every installment

A

Direct Loan

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12
Q

The lender collects in advance the interest and gives to the borrower the balance

A

Discount

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13
Q

The amount withdrawn is in excess of the depositor’s net balance in the bank. There is a pre-arranged amount that can be withdrawn for a definite period of time fixed in the agreement or contract but the bank and the customer or depositor .

A

Overdraft

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14
Q

As to type of user of loan

A
  1. Consumer or personal credit
  2. Mercantile or commercial credit
  3. Bank credit
  4. Investment credit
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15
Q

It is usually extended to the individual in which the purpose is to finance ome personal needs like the purchase of merchandise or commodities on a depressed payment plan

A

Consumer or personal credit

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16
Q

It is usually extended to persons dealing in COMMERCE and TRADE and is used to finance the purchase of inventories

A

Mercantile or commercial credit

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17
Q

The commercial banks extend short-term creidt to businessman for working capital purposes, that is, for the purchase of raw materials, the payment of wages and other expenses of a business incident to current operations.

A

Bank credit

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18
Q

Businessman usually obtain long-term funds through intermediary financial institutions such as investment banks, savings bank, insurance company or temporarily from commercial banks, primarily for the purpose of obtaining fixed capital.

A

Investment credit

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19
Q

As to security

A
  1. Secured loans
  2. Unsecured loans
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20
Q

Loans guaranteed by the assignment of some tangible assets of value which may be sold by the lender in case the borrower fails to pay for settlement of the debt

A

Secured loans

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21
Q

No collateral, character or clean loans are backed up safely by the integrity, ability and the willingness of the borrower to pay

A

Unsecured loans

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22
Q

As to purpose of use

A
  1. Agricultural credit
    2.commercial credit
  2. Industrial credit
  3. Consumer credit
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23
Q

These are loans granted to fiance the cultivation, development and improvement of agricultural land

A

Agricultural creidt

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24
Q

Is used to finance the day to day operation. A type of short-term loan granted to finance the production and distribution of commodities either by wholesale or retail, whether in storage or in transit to foreign and domestic markets

A

Commercial credit

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25
Q

It is used to finance the manufacture of goods, the construction of plant buildings or the acquisition and installation of equipment of machineries

A

Industrial credit

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26
Q

Loan granted for the purchase of goods and services for personal purposes, usually for intermediate consumption.

A

Consumer credit

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27
Q

As to matter of payment

A
  1. self-liquidating loan
  2. Non self liquidating loan
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28
Q

Loans pays for itself from the income of the amount borrowed

A

Self-liquidating loans

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29
Q

Are payable when the payments comes from earninsg of the borrower

A

Non self liquidating

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30
Q

An oral agreement to settle an obligation can be drawn into a written contract

A

Credit Instrument

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31
Q

Is the transfer of an instrument as to posession and title, if payable to BEARER, it is by mere delivery. If payable to ORDER, it is effected by both endorsement and delivery

A

Negotiation

32
Q

Signing the name at the back of check to negotiate it

A

Endorsement

33
Q

Means proper presentation of the instrument either for payment or for acceptance. If the instrument presented for payment is paid or accepted by the drawee, it is known to be HONORED. DISHONORED payment rejected by the drawee.

A

Presentment

34
Q

Is an instrument is DISHONORED upon presentation a protest may be filed or waived depending upon the circumstances if filled, this is usually in writing. Procedures for this is covered by law

A

Protest

35
Q

When there is a specified payee named in the instrument or when it is so indicated by the words “or order”.

A

Payable to Order

36
Q

Classification of Credit Instrument

A

1.As to acceptability
2. As to form
3. As to functions
4. As to Negotiability

37
Q

The instrument may either be of unlimited or limited acceptability

A

As to acceptability

38
Q

Those instruments which pass from hand-to-hand without question as toits source

A

Unlimited acceptability

39
Q

As to form

A
  1. Order to pay
  2. Promise to pay
40
Q

Is generally defined as the order of one person to a second person to pay a 3rd person a sum, certain money on demand or at a future determinable time. It may be in the form of checks, drafts, acceptances or postal money orders. It has 3 parties namely: DRAWER who gives the order, DRAWEE who is ordered to pay, and PAYEE, who is to recive payment

A

order to pay

41
Q

Who gives the order

A

Drawer

42
Q

Who is ordered to pay

A

Drawee

43
Q

Who is to receive the payment

A

Payee

44
Q

Contains the promise of one person to pay another a sum of certain in money on demand or at a future demandable time. It may be open book accounts, promissory notes, collateral PN, letters of credit and bonds. There are only 2 PARTIES in a promise to pay, the MAKER or the person promising to pay and the one to receive payment is the PAYEE.

A

Promise to pay

45
Q

As to functions of credit instrument

A
  1. Credit money
  2. Commercial credit instruments
  3. Investment credit instrument
46
Q

Emphasizes their use as a medium of exchange

A

Credit money

47
Q

Which comprise of the instruments use dto facilitate the use of credit in short-term commercial pursuits

A

Commercial credit instruments

48
Q

Are those used for long-term credit

A

Investment credit instruments

49
Q

Commercial credit instrument can be subdivided as

A

1.Promises to pay
2. Orders to pay

50
Q

It is one of the most common forms of credit instrument which in effect gives the implied verbal promise of the debtor when he buys consummable goods on credit

A

Open book account

51
Q

It is an unconditional written promise to the maker to pay a sum certain in money to bearer or order on demand or at a future determinable time

A

Promissory note

52
Q

This type of note is similar to the ordinary promissory note. However, it is called a ____________ because the collateral is describes on its face or a separate document bears such description

A

Collateral promissory note

53
Q

It is a written promise on the part of the bank to honor drafts drawn against it or for its account, by a specified beneficiary or his order under the specifications conatined in the letter or credit

A

Commercial Letters of Credit

54
Q

It is similar in intent as the commercial letter of credit. The banks credit standing is likewise substituted for that of the traveler. It’s use is to provide the traveler with funds enroute.

A

Traveller’s letter of credit

55
Q

Generally is an order of a depositor to his bank to pay a sum certain in money to a third person or himself on demand

A

Checks

56
Q

Classification of Checks

A
  1. Personal check
  2. Cashier’s/ Manager’s/Treasurer’s
  3. Certified check
  4. Traveller’s check
57
Q

Sometimes known as a business check. Its drawer is an individual for personal use or purpose

A

Personal check

58
Q

As in a check this is an oder to pay

A

Cashier’s/Manager’s/Treasurer’s

59
Q

Originally a personal check. The bank’s certification is required by the recipient of the check shall have been processed

A

Certified checl

60
Q

A variation of teh traveller’s letter of credit, this is also used by travelers

A

Traveller’s check

61
Q

Is one which is meant for deposit only or for a specified purpose only which is also used to limit its further negotiation. The face of the check will bear two parallel lines on the left upper corner

A

Crossed check

62
Q

Is one which is dated beyond the date of deposit or actual balance

A

Post-dated check

63
Q

Check deposited or presented for payment after six months from date of deposit or issuance

A

Stale check

64
Q

Checks returned tothe drawer. Also termed as BAD CHECKS, which means that they are not sufficiently covered with FUNDS.

A

Rubber or Bouncing Checks

65
Q

When the deposits is check is finally cleared and paid by his bank, these checks are marked

A

Cancelled checks

66
Q

Check presented for payment within six month

A

Dated check

67
Q

Check without amounts written

A

Blank check

68
Q

Are orders to pay and are likewise drawn by a drawer against a drawee to pay a 3rd person a sum certain in moneyon demand or at a future determinable time.

A

Drafts

69
Q

Is originallyorder to pay. It is a time draft. It is also a promise to pay. It would then certain the promise of the drawee (now known as acceptor) to pay the draft at maturity

A

Acceptance

70
Q

In the realm of investment credit, time instruments used are promises to pay which are in term of:

A
  1. Bonds
  2. Long-term Notes
  3. Evidences of ownership in a corporation
71
Q

Are long term promissory notes issued under a corporate seal, in large sums actually, and in services

A

Bonds

72
Q

Bonds and this are both promises to pay and their terms of payment covers 5 years or more

A

Long-term promissory notes

73
Q

Evidences of ownership

A
  1. Stock certificate
  2. Stock of right
74
Q

This instrument evidences the part of ownership of a corporation’s capital through purchase of share or shares of stock. The corporation is not under obligation to devlare dividends if earned and if ever , the stockholders shares according to the type of stock he owns

A

Stock certificate.

75
Q

The RIGHT referred to here is the pre-emptive right attached to ownership of a share of stock. This means that the original stockholder is given the option to purchase new additional shares of stock at the new issue price before such stocks are offered to the public

A

Stock of right

CREDIT AND COLLECTION (6 decks)

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