112. When a draft guarantees payment for goods in international trade, the draft is called a:
a. bill of trade
b. bill of exchange
c. bill of sale
d. payment of exchange
e. balloon note
113. When a draft guarantees payment for goods in international trade, the draft is called a:
a. bill of trade
b. balloon note
c. bill of sale
d. payment of exchange
e. none of the other choices are correct
114. The most common use of drafts is to:
a. guarantee payment for goods in international trade
b. guarantee payment for real estate
c. guarantee payment for nonnegotiable contracts
d. guarantee payment between businesses located in different states
e. guarantee payment from bankrupt parties
115. The most common use of drafts is to:
a. guarantee payment from bankrupt parties
b. guarantee payment for real estate
c. guarantee payment for nonnegotiable contracts
d. guarantee payment between businesses located in different states
e. none of the other choices are correct
116. A sight draft is:
a. also known as a trade acceptance agreement
b. also known as a sales draft
c. also known as a time draft
d. payable upon presentation by the seller to the buyer of the goods
e. none of the other choices
117. A sight draft is:
a. also known as a trade acceptance agreement
b. also known as a sales draft
c. also known as a time draft
d. also known as an account receivable
e. none of the other choices
118. The draft that requires immediate payment by the drawee to the payee, which is true of a check, is called:
a. a trade acceptance draft
b. a sight draft
c. a time draft
d. an account receivable
e. none of the other choices
119. The draft that requires immediate payment by the drawee to the payee, which is true of a check, is called:
a. a trade acceptance draft
b. a bankers’ acceptance
c. a time draft
d. an account receivable
e. none of the other choices
120. A requires immediate payment by the drawee to the payee.
a. sight draft
b. balloon draft
c. bank draft
d. personal draft
e. time draft
121. A requires immediate payment by the drawee to the payee.
a. time draft
b. balloon draft
c. bank draft
d. personal draft
e. none of the other choices are correct
122. specify payment to be made in the future, such as 60 days from the date of the writing of the draft.
a. Balloon drafts
b. Delayed drafts
c. Time or term drafts
d. Real estate drafts
e. Lapsed drafts
123. specify payment to be made in the future, such as 60 days from the date of the writing of the draft.
a. Balloon drafts
b. Delayed drafts
c. Lapsed drafts
d. Real estate drafts
e. none of the other choices are correct
124. are drafts that mature on the payment date set in the future.
a. Time or term drafts
b. Delayed drafts
c. Lapsed drafts
d. Real estate drafts
e. none of the other choices are correct
125. are drafts that mature on the payment date set in the future.
a. Balloon drafts
b. Delayed drafts
c. Lapsed drafts
d. Real estate drafts
e. none of the other choices are correct
126. When a payee wants to get cash immediately for a draft he can sell it to another party, but interest must be paid.
This is called:
a. reducing the draft
b. financing the draft
c. discounting the draft
d. selling the draft
e. cashing the draft
127. When a payee wants to get cash immediately for a draft he can sell it to another party, but interest must be paid.
This is called:
a. reducing the draft
b. financing the draft
c. cashing the draft
d. selling the draft
e. none of the other choices are correct
128. An “acknowledgment by a bank” that it has received money from a customer with a promise by the bank that it will
repay the money received at a date specified or, in some instances, on demand is a:
a. certificate of deposit
b. certificate of payment
c. balloon certificate
d. real estate certificate
e. draft certificate
129. An “acknowledgment by a bank” that it has received money from a customer with a promise by the bank that it will
repay the money received at a date specified or, in some instances, on demand is a:
a. draft certificate
b. certificate of payment
c. balloon certificate
d. real estate certificate
e. none of the other choices are correct
130. Most large certificates of deposit are:
a. not negotiable because they are bank-made debts
b. not negotiable because Article 3 does not allow them to be negotiable
c. not negotiable because the payee would lose control
d. not negotiable because the maker would lose control
e. negotiable
131. Most large certificates of deposit are:
a. not negotiable because they are bank-made debts
b. not negotiable because Article 3 does not allow them to be negotiable
c. not negotiable because the payee would lose control
d. not negotiable because the maker would lose control
e. none of the other choices
132. Most large certificates of deposit are:
a. not negotiable because they are bank-made debts
b. not negotiable because Article 3 does not allow them to be negotiable
c. not negotiable because the payee would lose control
d. not negotiable because the maker would lose control
e. insured by the FDIC for up to $100,000
133. Most large certificates of deposit are:
a. not negotiable because they are bank-made debts
b. insured by the FDIC for up to $500,000
c. insured by the FDIC for up to $200,000
d. insured by the FDIC for up to $100,000
e. none of the other choices are correct
134. A creditor is a person or business who:
a. lends money to someone else
b. allows goods to be purchased by someone else
c. allows services to be purchased by someone else
d. all of the other choices
e. none of the other choices
135. A
debtor.
is one who lends money to, or allows goods or services to be purchased on credit by, another party, the
a. creditor
b. purchaser
c. lender
d. financer
e. debtee
136. A
debtor.
is one who lends money to, or allows goods or services to be purchased on credit by, another party, the
a. payee
b. purchaser
c. lender
d. financer
e. none of the other choices are correct
137. A creditor is one who lends money to, or allows goods or services to be purchased on credit by, another party, the:
a. payee
b. debtor
c. debtee
d. financer
e. recipient
138. A creditor is one who lends money to, or allows goods or services to be purchased on credit by, another party, the:
a. payee
b. recipient
c. debtee
d. financer
e. none of the other choices are correct
139. Credit terms must specify which of the following:
a. the interest rate, if any, that applies to the sum owed
b. the principal of the debt
c. payment dates
d. all of the other specific choices must be specified
e. none of the other specific choices must be specified
140. Credit terms must include:
a. the principal of a debt
b. the interest rate, if any, that applies
c. the payment dates
d. all of the other specific choices
e. none of the other specific choices are necessary, but are commonly used
141. To raise needed capital, small companies most often rely on:
a. currency exchanges
b. commodities markets
c. debt financing
d. equity financing
e. derivative financing
142. The sale of stock in the company or the sale of negotiable instruments that are subject to securities regulation is
known as:
a. equity financing
b. debt financing
c. credit financing
d. bankruptcy
e. sale financing
143. The sale of stock in the company or the sale of negotiable instruments that are subject to securities regulation is
known as:
a. sale financing
b. debt financing
c. credit financing
d. bankruptcy
e. none of the other choices are correct
144. Which of the following are sources of credit information:
a. customer financial statements
b. banks
c. credit reporting agencies
d. trade associations
e. all of the other specific choices are sources of credit information
145. Most creditors seek information about debtors from:
a. trade associations
b. credit reporting agencies
c. customer financial statements
d. banks
e. all of the other choices
146. Debt incurred by business includes:
a. only long-term debt
b. only short-term debt
c. both long and short-term debt
d. only debt incurred in the purchase of tangible materials
e. none of the other choices are correct
147. As a creditor, a business should:
a. determine the debtor’ ability to repay
b. establish debt collection practices
c. determine how much capital it needs to borrow
d. determine the debtor’ ability to repay and establish debt collection practices
e. all of the other specific choices
148. A business that extends credit to buyers should establish:
a. credit policies
b. income debit policies
c. collection policies
d. credit and collection policies
e. credit, collection, and income debit policies
149. Capacity refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s ability to pay
c. the debtor‘s financial condition
d. the debtor’s reputation
e. the debtor’s assets to secure debt
150. Capacity refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s assets to secure debt
c. the debtor‘s financial condition
d. the debtor’s reputation
e. none of the other choices are correct
151. Capital refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s assets to secure debt
c. the debtor‘s financial condition
d. the debtor’s reputation
e. none of the other choices are correct
152. Capital refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s assets to secure debt
c. the debtor’s ability to pay
d. the debtor’s reputation
e. none of the other choices are correct
153. Character refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s ability to pay
c. the debtor‘s financial condition
d. the debtor’s reputation
e. the debtor’s assets to secure debt
154. Character refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s ability to pay
c. the debtor‘s financial condition
d. the debtor’s assets to secure debt
e. none of the other choices are correct
155. Collateral refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s ability to pay
c. the debtor‘s financial condition
d. the debtor’s reputation
e. the debtor’s assets to secure debt
156. Collateral refers to:
a. a company‘s ability to extend credit to a customer
b. the debtor’s ability to pay
c. the debtor‘s financial condition
d. the debtor’s reputation
e. none of the other choices are correct
157. When a company gives credit to a customer, it may create which of the following?
a. a retainer account
b. an installment account
c. an open account
d. an installment account or an open account
e. an installment account or an open account or a retainer account
158. For credit under a(n)
for early payment.
a. closed account
b. open account
c. real account
d. outstanding account
e. specific account
the terms define the credit period available to the customer and any discounts offered
159. For credit under a(n)
for early payment.
a. closed account
b. specific account
c. real account
d. outstanding account
the terms define the credit period available to the customer and any discounts offered
e. none of the other choices are correct
160. The most common form of credit is a(n):
a. closed account
b. open account
c. real account
d. revolving account
e. installment account
161. In a(n) , the debtor makes a minimum monthly payment and more debt can be added to the account over time.
a. collections account
b. installment account
c. revolving account
d. open account
e. security account
162. In a(n) , the debtor makes a minimum monthly payment and more debt can be added to the account over time.
a. collections account
b. installment account
c. security account
d. open account
e. none of the other choices
163. In a(n) , goods and services are sold on an invoice that shows transactions; full payment is expected within a
fixed time period.
a. collections account
b. installment account
c. revolving account
d. open account
e. security account
164. In a(n) , goods and services are sold on an invoice that shows transactions; full payment is expected within a
fixed time period.
a. collections account
b. installment account
c. revolving account
d. security account
e. none of the other choices
165. An open account means:
a. multiple payments are made on a regular schedule
b. minimum monthly payments are made on an account balance
c. half payment is due when the invoice is received
d. full payment is due within a fixed time period
e. the borrower may borrow up to the full amount of the credit limit
166. An open account means:
a. multiple payments are made on a regular schedule
b. minimum monthly payments are made on an account balance
c. half payment is due when the invoice is received
d. the borrower may borrow up to the full amount of the credit limit
e. none of the other choices
167. A(n) allows more debt to be added to the account over time.
a. open account
b. closed account
c. revolving account
d. collecting account
e. installment account
168. A(n) allows more debt to be added to the account over time.
a. open account
b. closed account
c. installment account
d. collecting account
e. none of the other choices are correct
169. Debt collections may be done by:
a. invoice
b. follow–up letter
c. phone calls
d. personal visits
e. all of the other choices
170. Debt collection usually begin with:
a. a letter stating that the account is past due
b. a personal visit by a debt collector
c. an angry phone call
d. a court summons
e. an official visit by a debt collection agency
171. If a debtor refuses to pay an unsecured creditor, and the debtor is insolvent, the unsecured creditor collects:
a. nothing
b. one-half of the bill
c. one-quarter of the bill
d. the full amount of the bill, over time
e. the bill plus associated attorney’s fees