Credit and Collection (Midterm) Flashcards by Canlas, Fiona Louise R.

(6) Other Important Documents

Letter of Credit
Bill of Lading
Trust Receipts
Warehouse Receipts
Mortgage
Pledge

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comes from the Latin word _____ which means TO TRUST

Credit
“Credere”

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early shops were quite small and often times were located either inside or in front of the home of the owner

Retail Stores

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3 Kinds of Consumer Credit

Charge Account
Installment Credit
Personal Loans

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to inspect and pick out whatever they want to buy and have them check out through the cashier.

Grocery and Department Stores

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It is executed by the maker who, as is logical to expect, is the debtor who promises that he will pay seller the amount owed at certain determinable time.

Promissory Notes

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largely a brand-new form of retailing, its chief features consist of assembling all kinds of goods including non-food items, clothing, shoes hardware and countless others

Supermarkets

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Loans granted to finance the acquisition or improvement of real estate.

Real Estate Loans

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Consist of advances that have been made to a business enterprise to enable it to purchase or construct necessary plant and equipment.

Investment Credit

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It is a letter used by a bank authorizing a designated individual firm or corporation to draw on it up to the total amount for which the credit is established.

Letter of Credit

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Refers to mortgage by a corporation used as a collateral security for a loan of a fixed amount.

Close-end mortgage

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It provides financial assistance (loans) to all who are members which are employed in productive activities to earn income as part of its investment operations (private)

SSS

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Those letter that cannot be cancelled or revoked at any time after its issuance or better the expiration.

Irrevocable Letter of Credit

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refers to power the ability to obtain goods without an actual tender of payment. He has the obligation to be done to creditor (Obligor)

Debtor

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Also defined as a “receipt given” by an importer who has loaned money upon importer’s goods.

Trust Receipts

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It refers to credit that is granted for a short period
to help out the borrower with his temporary working capital needs.

Commercial Loans

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5 Functions of Credit:
1. To ____ the savings of the lending customers.
2. To ______ these funds financially on the basis of the careful _______ and ______ of credit.
3. To ______ risk to a degree unattainable for individual investors
4. To ______ short term into long term funds through an expedient and carefeul staggering of ______ dates.
5. To perform _____ and _____ function.

pool
invest, investigation, analysis
diversify
transform, maturity
insurance, trust

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Just another term for government borrowing, as
means of pledging the goods faith and the resources on their behalf

Public Credit

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8 Advantages of Credit:
1. facilitates and _______ to the increase in ______ by making funds available for productive purposes
2. saves _____ and expense by providing a safer and more _______ means of completing transactions.
3. helps expand the ______ ______ of every member of the business
4. enables ______ _____ of goods providing an increase in material well-being
5. helps expand _______ opportunities through education, job training and jobb creation.
6. spreads ______ to various sectors of the economy.
7. makes possible to the _____ of new _____.
8. helps _____ become more convenient for customers.

contributes
time, convenient
purchasing power
immediate consumption
economic
progress
birth, industries
buying

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This is type of mortgage, a corporation may issue bonds in whatever number it may deem proper under the circumstance.

Open-end mortgage

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It is essential growth for the
government to provide the necessary bases for growth.

Government Financing Institution

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3 Kinds of Private Development Banks

Veteran Bank
Land Bank
Sales Finance Companies

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a private corporate venture in the
financing of distribution through the purchase of the vendor’s instalment sales contract.

Sales Finance Companies

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As provided under section 74 of RA no. 3844, it is intended to finance the acquisition by the government of landed estates for division and resale to small landholders as well as the purchase of the landholdings by the agricultural lessee from the landowner.

Land Bank

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It is a written account of goods shipped by any person, signed by the agent of the owner of the vessel, or by its master, acknowledging receipts of the goods and promising to deliver them safe at the port directed, damages of the sea excepted.

Bill of Lading

3 Types of Loan Agreement

Revolving Credit Term Loan Stand-by-Commitment

It belongs to non-bank sector of the system and gather funds for its lending operation from sources other than deposit.

Investment Banking

A warehouseman, in the absence of some lawful excuse provided by the warehouse receipts law, is bound to deliver the goods upon a demand made either by the holder of a receipts for the goods or by the depositer, if such demand is accompanied with.

Obligation to Deliver

a bulk loan availed by manufacturers and public utility firms granted to finance the acquisition of new or additional plants and machinery

Industrial Loan

(2) objects of Mortgage

Chattel Mortgage Mortgage on Real Property

It is an investment banks which are concerned with the transfer of capital from those have more funds than they actually use to those who need for utilization in long term activities.

Investment Houses

4 Disadvantages of Credit: 1. Credit at times, encourages ______. This happens when those in charge of the ______ of other people throw caution to the wind and thereby become careless _____ in their eagerness and desire and make huge _____. 2. tends to contribute to ______ and carelessness on the part of people who obtain it. 3. many entrepreneurs resort to _____-______. Failure to generate expected income can cause a _____ which affects the nation's economy, 4. Owing to the observation that business can be ______ or _______ rapidly though the use of credit.

1. speculation, savings, unscrupulous, profits 2. extravagance 3. over-expansion, collapse 4. expanded, contracted

Kinds of Bill of Exchange: (2)

Foreign Bill Domestic Bill

Where a warehouseman delivers the goods to one who is not in fact lawfully entitled to the possession of them.

Liability for Misdelivery

2 Kinds of individual money lender

– Those who grant loans as personal accommodation to friends and relatives as a term of gratitude. – Those who make the lending of money a profitable business.

It is a "bailment of goods" by a debtor to his creditor to be kept till the debt is discharge.

Pledge

advances use for agricultural development that provides a favorable environment for a built market for the many products of country’s industries.

Agricultural Credit

these are loans to farmers, the purpose of the said loan is to finance the planting, improvement and harvesting of agricultural products.

Agricultural Loans

All movable which are within the commerce of man may be pledged, provided they are susceptible of possession.

Object of Pledge

(2) Other types of Mortgage

Close-end Mortgage Open-end Mortgage

4 Types of Commercial Establishment

1. Retail Stores 2. Grocery and Department Stores 3. Supermarkets 4. Pawnshop

2 Types of International Organization

World Bank International Monetary Fund

Those letter of credit that could be revoked under such condition.

Revocable Letter of Credit

It is legally defined as one wherein the drawer and the drawee reside in two different countries.

Foreign Bill

Bank advances to consumer are made either by means of loan or overdraft on current account.

Bank Credit

Those are property like land, building, machinery and factories which are immovable.

Mortgage on Real Property

Also known as "Book Credit"

Open Book Account

As defined under RA no. 5980 these are the financing corporation or partnership which primarily organized for the purpose of extending credit facilities to consumer, industrial, commercial or agricultural enterprise

Financing Companies

it is authorized to grant loans for the establishment, rehabilitation, expansion or development of any agricultural, commercial or industrial or personal services including public utilities as well as loan on or discount notes

Veteran Bank

As conceived and establish under RA no. 720 as amended, it is designed to provide the credit needs of borrowers in the rural areaswithin easy reach and access and at reasonable terms

Rural Bank

While lenders and borrowers may be brought together through credit instruments and credit market, in many instances credit transaction are consummated through credit institution which serve as middleman between lender and borrowers.

Financial Intermediaries

The pawner who fails to pay his obligation on the date it falls due may, within ninety days from the date of maturity of the obligation, redeem the pawn by paying principal as well as the interest corresponding to the obligation.

Redemption and Disposition

A medium of exchange, it is used not only for production, rather, it was intended for consumption.

Money

It consists of stipulation of the maximum amount which the business entity can borrow, the interest rate that will be imposed on all loans as the requirement which the borrowing entity must meet

Loan Agreement

Institutional and personal administration of funds created or constituted for the benefits of others.

Trust and Pension Plan Manager

Those are personal property that are movable.

Chattel Mortgage

5 Classes and Kidns of Credit Instrument

Open Book Account Trade Acceptance Promissory Notes Bill of Exchange Credit Card

one kind of the consumer credit, which is the oldest form of sales and purchase credit.

Charge Account

4 Foundation of Credit 1. Creditors must have ______ _____ in the personal character and in the ability as well as willingness of their debtors to accept, honor, and settle their _______. 2. Proper ______ must exist for performing credit operations. 3. The money standard may be ______. 4. The ______ must stand ready to assist the creditor in enforcing payment of loan extended to the debtor.

1. Absolute Confidence, obligations 2. facilities 3. stable 4. government

Also considered as Consumer Credit

Personal Credit

Refers to a document which evidence the existence of credit transaction serve to establish the rights and responsibilities of the parties to the transaction

Credit Instrument

It is generally for consumption purposes, thus meet serious personal obligations.

Personal Loans

A significant to the continued functioning of a credit economy as may be gauged by the kind and amount of credit that they grant.

Commercial Establishment

– extending credit always involves a ______ for the lender since he can never be certain that the debt will be paid.

Risk

Described as an acknowledgement of a debt by the buyer, in favor of the seller for merchandise.

Trade Acceptance

It is a numerous just as they varied in kinds and in scope ranging from pawnshop to such credit institution as investment houses.

Financial Institution

These are advance made by a bank in behalf of an importer if on due date.

Trust Receipts

It is an unconditional order in writing addressed by one person to whom it is addressed to pay the demand at a fixed future time a certain amount of money to a specific person.

Bill of Exchange

In response to the needs of business and industry, a number of corporations have been organized in this country aimed at purposely to provide a wide complement of corporate financing services

Philippine Finance Companies

It is equally known as commercial credit, sometimes it is a trade credit.

Mercantile Credit

2 Types of Government Financing Institution

Social Security System (SSS) Government Service Insurance System (GSIS)

It is a document that is frequently used to protect the bank when it becomes necessary to release the goods in order that the borrower may utilize or dispose of them.

Trust Receipts

Refers to any corporation organized for the purpose of accumulating the savings of depositors and investing them together with its capital in bonds or loan secured by bonds and some security loan activities.

Savings and Mortgage Banking

3 Different Kinds of Cost

Interest Operating Expenses Risk

the corporation is conferred the right of securing a term loan under certain specified terms for current or for some future purposes within the time agreed upon

Stand-By-Commitment

it provides to fill the needs or employees against unforeseen contingencies in the future, members shall be compulsory upon all appointive officers and employees in the executive, legislative and judicial branches of the government.

GSIS

supply of money in many instances could not adequately meet the increasing volume of goods entering the exchange transaction accounted for money being supplemented by the use of credit.

Birth of Credit

Lending Money with interest upon

Individual Money Lenders

A person with a good credit standing may be able to borrow on his signature alone.

Personal Loan

2 Nature of Credit (two-way street)

Debtor Creditor

How Credit Affects Prices?

increases and decreases in credit may affect prices in every much the same way as money supplies changes.

a business enterprise may finance its needs by borrowing from the bank on a short-term basis up to a certain specified maximum account.

Revolving Credit

3 Important Purposes are served by a bill of lading

1. It conveys title to the merchandise. 2. It is a receipt acknowledgement of the goods signed by the carrier. 3. It serves as a contract of transportation between the shipper and the carrier.

It is the most commonly known legal instrument for secured borrowing in business either individual or corporate form.

Mortgage

As a seller of goods or services on credit, he has both moral and legal right to demand of his debtor to pay obligation when due (obligee).

Creditor

2 types of Letter of Credit

Irrevocable Letter of Credit Revocable Letter of Credit

not only limited to underwriting and protection, it also deals with investment of the funds held by them in trust for them for their policy holder

Insurance Companies

It is hardly to point out the observation that business enterprise that extend credit shoulder the same expenses as other business.

Operating Expenses

conversion of the rehabilitation finance corporation to aid in the establishment of provincial and city private development banks.

Development Bank of the Philippines

It emphasizes the business world is so common that by way of compliment, it is generally called as "the life blood of business"

Use of Credit

It is one wherein the parties both reside in the same country.

Domestic Bill

Used by individuals to buy consumer goods inteded to provide immediate satisfaction to their wants and needs.

Personal Credit

(3) Essential requisites to Pledge and Mortgage

1. That they constituded to secure the fulfillment of a principal obligation. 2. That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged. 3. That the person constituting the pledge or mortgage have the free disposal of their property.

Business establishment engaged in lending money on property delivered as collateral

Pawnshop

It is also considered as another form of credit instrument whereby through its use, holders thereof are able to purchase goods and services on credit against payment in the future.

Credit Card

It is in the form of percentage serve as a charge for its' (credit) use periodically.

Interest

One particular class of credit known as public credit that is, one government borrowing from another

International Organization

Cooperatives composed of small producers who voluntarily join together to form a business which themselves control and patronized.

Credit Unions

It is a "written acknowledgement" by a warehouseman that holds certain goods, identified by the receipt, for the person to whom the writing is issued.

Warehouse Receipts

means an open country, or just another name for agricultural bank

Rural Banks

Most common type of consumer credit today, a number of individual terms as buying on time.

Installment Credit

It is any corporation engaged in the business of accumulating the savings of its member or stockholders

Savings and Loan Association

These are loans to exporters to finance the processing of exports of goods prior to their being shipped to the foreign buyer.

Packing Credit Advances

Granted by commercial banks to finance the acquisition of facilities such as machinery and equipment by manufacturer.

Term Loan

A type of devide serves to identify credit customer as those to whom the store has given a symbol of its confidence in them.

Credit Cards