Lesson 1

Question 1

a contract agreement in which a borrower receives a sum of money or something of value and repays the lender at a later date, generally with interest.

Answer 1

credit

Question 2

may refer to the creditworthiness or credit history of an individual or a company.

Answer 2

Credit

Question 3

To an accountant, it often refers to a _______________ that either decreases assets or increases liabilities and equity on a company’s balance sheet.

Answer 3

bookkeeping entry

Question 4

an agreement to purchase a product or service with the express promise to pay for it later. This is known as _________.

Answer 4

buying on credit

Question 5

buying on credit today is via the use of _______________.

Answer 5

credit cards.

Question 6

The bank that issued the card repays the merchant in full and extends credit to the buyer, who may repay the bank over time while incurring interest charges in the meantime.

Answer 6

credit cards

Question 7

The amount of money a consumer or business has available to borrow—or their creditworthiness—is also called ________.

Answer 7

credit

Question 8

includes the strategies employed by businesses to accelerate sales of products or services through the extension of credit to potential customers or clients.

Answer 8

Credit control

Question 9

Credit control might also be called _____________, depending on the scenario under review.

Answer 9

credit management

Question 10

businesses prefer to extend credit to those with ______ credit and limit credit to those with _____ credit, or possibly even a history of delinquency.

Answer 10

“good”; “weak”

Question 11

work to measure and report the credit of individuals as well as businesses (and especially for the bonds that they issue).

Answer 11

Credit rating agencies

Question 12

is an entry that records a decrease in assets or an increase in liability as well as a decrease in expenses or an increase in revenue

Answer 12

Credit

Question 13

The most popular form of credit is

Answer 13

bank credit or financial credit

Question 14

includes car loans, mortgages, signature loans, and lines of credit.

Answer 14

bank credit or financial credit

Question 15

There may be an exchange of goods and services in exchange for a _______________, which is another type of credit.

Answer 15

deferred payment

Question 16

argues that all money (whether fiat or backed by something) is a form of credit.

Answer 16

credit theory of money

Question 17

In the context of ___________________, a credit is an entry recording a sum that has been received.

Answer 17

personal banking or financial accounting

Question 18

______________ appear on the right-hand side of a checking account register, and ___________ appear on the left.

Answer 18

credits (deposits); debits (money spent)

Question 19

three levels of credit control

Answer 19

Restrictive; Moderate; liberal

Question 20

is a low-risk strategy, limiting credit only to customers with a strong credit history,

Answer 20

restrictive policy

Question 21

is a middle-of-the-road risk strategy that takes on more risk,

Answer 21

moderate policy

Question 22

is a high-risk strategy where the company extends credit to most customers.

Answer 22

liberal credit control policy

Question 23

refers to the market through which companies and governments issue debt to investors, such as investment-grade bonds, junk bonds, and short-term commercial paper.

Answer 23

Credit Market

Question 24

are usually responsible for administering credit policies.

Answer 24

credit manager or credit committee

Question 25

Which is the length of time a customer has to pay

Answer 25

Credit period

Question 26

present purchasers an incentive to pay in cash more quickly

Answer 26

Cash discounts

Question 27

Some businesses offer a percentage reduction of discount from the sales price if the purchaser pays in cash before the end of the discount period.

Answer 27

Cash discounts

Question 28

Measures the aggressiveness in attempting to collect slow or late paying accounts.

Answer 28

Collection Policy

Question 29

Includes the required financial strength a customer must possess to qualify for credit.

Answer 29

Credit Standards

Question 30

True or False Lower credit standards boost sales but also increase bad debts.

Answer 30

True

Question 31

a barometer of creditworthiness.

Answer 31

FICO score

Question 32

refers to the market through which companies and governments issue debt to investors

Answer 32

Credit market

Question 33

Credit Market offers:

Answer 33

- investment-grade bonds - junk bonds - short-term commercial paper

Question 34

debt market, the credit market also includes debt offerings, such as

Answer 34

- notes and securitized obligations, - including collateralized debt obligations (CDOs), - mortgage-backed securities, and. - credit default swaps (CDS).

Question 35

is the largest issuer of debt, issuing Treasury bills, notes and bonds, which have durations to maturity of anywhere from one month to 30 years

Answer 35

Government

Question 36

process of granting credit to yourc customers setting payment terms recovering payments ensuring customers comply with your company’s credit policy

Answer 36

Credit Management