Which of the following are the main costs of making sales on credit?

Loss of interest, Irrecoverable debts

The use of EBITDA rather than profit before interest has the following advantage

The figure gives a closer approximation to cash flow

Which of the following statement are correct.

Granting credit can result in lost interest to a business, The granting of credit can increase sales

Payment within 60 days of invoice date;Cash discount of 2% within 14 days. Terms expressed as?

Net 60 days 2% discount for payment within 14 days

What question would NOT normally be asked when requesting a trade reference?

Do you think this customer has a good reputation?

Which of the following is a cash transaction?

Payment of expenses with a company credit card

What are the two main stages in the credit control function?

Ordering cycle and collection cycle

Which of the following describes the liquidity of a business?

The ability to pay amounts when they are due

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Credit Control intro

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Questions 14

Answers

1
Which of the following are the main costs of making sales on credit?
Loss of customers
Loss of goodwill
Loss of interest
Irrecoverable debts
2
The use of EBITDA rather than profit before interest has the following advantage
The figure gives an idea of the organisation
The figure gives a closer approximation to cash flow
The calculation is simpler
The figure is a closer approximation to profit
3
Which of the following statement are correct.
Granting credit can result in lost interest to a business
The granting of credit can decrease irrecoverable debts
The granting of credit can increase sales
4
Which of the following stages is least likely to be the responsibility of credit control
Issuing invoice to customer
Issuing payment reminder to customer
Issuing offer of credit to customer
Issuing statement to customer
5
Which is NOT an external source of information for assessing a customer's credit status?
The internet
Bank reference
Companies House
Customer visit
6
Payment within 60 days of invoice date;Cash discount of 2% within 14 days. Terms expressed as?
Net 60 days 2% discount for payment within 14 days
Gross 60 days net 2% 14 days
Gross 60 days 2% discount for payment within 14 days
Net 14/60 days
7
What question would NOT normally be asked when requesting a trade reference?
How long have you been trading with this customer?
Do you think this customer has a good reputation?
What level of credit do you allow this customer?
Have you ever supplied credit to this customer?
8
Which of the following would not be included in a letter of refusal of credit?
Concerns about financial statements
Offer of future reassessment of creditworthiness
Offer of cash trading
Details of supplier references
9
Which of the following is not a main role of the credit control department?
The despatch of goods
The pursuit of payment
Ongoing checks on credit limits
The initial decision whether to grant credit
10
Which of the following would NOT be classified as a liquid asset?
Non-current assets
Inventory
Bank deposit accounts
Receivables
11
Which of the following is a cash transaction?
Sale of goods for list price less 2% cash discount
Purchase of non-current assets on an instalement basis
Sale of non-current assets with terms of 30 days for payment
Payment of expenses with a company credit card
12
What are the two main stages in the credit control function?
Ordering cycle and collection cycle
Despatch cycle and collection cycle
Ordering cycle and payment cycle
Despatch cycle and payment cycle
13
Which is a disadvantage of management accounts versus financial accounts for assessment?
They are not in a set format and can be tailored
They are more up to date
They are not audited
They show information that management feels is important
14
Which of the following describes the liquidity of a business?
The ability to raise loan finance
The ability to pay a dividend when due
The ability to pay amounts when they are due
The ability to make a profit

Credit Control intro Flashcards | StudBud