chapter 16.2

Question 1

proprietary credit

Answer 1

card can only be used in the stores of the company that issued it

Question 2

cost of credit

Answer 2

is variable expense that influences pricing decisions

Question 3

credit policy

Answer 3

is written set of guidelines used by an organization to determine how many and which customers will be approved for credit

Question 4

character (Three C’s of credit)

Answer 4

current debt, payment history, credit score

Question 5

Capacity (Three C’s of credit)

Answer 5

regular income and term of employment

Question 6

Capital (Three C’s of credit)

Answer 6

all assets and liabilities

Question 7

Credit report

Answer 7

is a record of credit history and financial behavior for a business or individual

Question 8

credit bureau

Answer 8

is a private firm that maintains consumer credit data and provides credit information to businesses for a fee

Question 9

credit score

Answer 9

is a numerical measure of a loan applicants credit worthiness at a particular point in time

Question 10

credit risk

Answer 10

is the potential of credit not being repaid

Question 11

accounts receivable

Answer 11

is a list of the individuals or businesses that owe money to a company

Question 12

accounts receivable aging report

Answer 12

shows when accounts receivables are due, as well as the length of time accounts have been outstanding

Question 13

collection agency

Answer 13

is a company that collects past-due bills for free

Question 14

cash flow (Five C’s of banking)

Answer 14

movement of money into and out of a business

Question 15

capacity (five c’s of banking)

Answer 15

ability to repay a loan

Question 16

capital five (c’s of banking)

Answer 16

owners investment in the business

Question 17

collateral (five c’s of banking)

Answer 17

property sued to secure a loan

Question 18

conditions (five c’s of banking)

Answer 18

environment in which the business operates