Intro to Business Study Guide Ch 29-30

Name:

Multiple Choice
Identify the choice that best completes the statement or answers the question.

Which of the following causes business owners to like bank credit cards?

a.	Banks determine whether the customer is a good risk.
b.	The bank assumes most of the trouble and expense of granting credit.
c.	Businesses get their money, less a fee, immediately.
d.	All of the above.

Which of the following are typical uses of credit by American consumers?

a.	buying fairly expensive products	c.	borrowing to pay taxes
b.	paying for medical care	d.	all of the above

The value of your possession is called

a.	capacity	c.	capital
b.	character	d.	all of the above

Which of the following is true about a cosigner of a note?

a.	The cosigner is responsible for the payment of the note.
b.	The cosigner must be a friend or relative.
c.	The credit rating of the cosigner is unimportant.
d.	All of the above.

A loan in which you do not pay anything until the end of the loan period is called

a.	a collateral loan	c.	a single-payment loan
b.	an installment loan	d.	a promissory note

Your honesty and willingness to pay your debits is called

a.	capacity	c.	capital
b.	character	d.	none of the above

Which of the following is a benefit of credit?

a.	establishing a credit rating
b.	buying larger quantities of things you want
c.	not having to shop around
d.	getting lower prices for merchandise

Which of the following is true about a revolving charge account?

a.	A finance charge is added if the total amount owed is not paid.
b.	There is usually a maximum that can be owed at any one time.
c.	Some payment is required each month.
d.	All of the above.

Which of the following is NOT true about credit references?

a.	They are important to creditors.
b.	They are usually ignored by creditors.
c.	They may be asked to verify a credit record.
d.	They may be asked about a bill payment record.

10.

A charge account in which you agree to pay a fixed amount each month to cover purchases of gas or electricity is called

a.	a revolving charge account	c.	a regular charge account
b.	a budget charge account	d.	none of the above

11.

If you go to a bank and apply for an installment, you are trying to get

a.	loan credit	c.	sales credit
b.	trade credit	d.	none of the above

12.

Goods that are quite expensive and can last a long time usually are purchases using

a.	installment sales credit	c.	T & E credit cards
b.	all company credit cards	d.	none of the above

13.

A partial payment of the purchase price is called

a.	a finance charge	c.	a regular payment
b.	a down payment	d.	none of the above

14.

Which of the following would make it possible for a teenager to get a credit card in his or her name?

a.	if she or he had a part-time job
b.	if she or he had good grades in school
c.	if she or he got a parent or guardian to cosign the agreement
d.	none of the above

15.

A business that receives an invoice with the terms 2/10, n/30

a.	must pay the entire amount right away
b.	must pay $10 now and $30 later
c.	can deduct 2% from the amount owed if payment is made within ten days
d.	does not have any time limit on the amount to be paid

16.

Anyone who buys on credit or receives a loan is known as the

a.	lender	c.	creditor
b.	debtor	d.	obligator

17.

If you charge a purchase at the time you buy a good or service, you are using

a.	loan credit	c.	sales credit
b.	trade credit	d.	none of the above

18.

Which of the following is true about Travel & Entertainment Cards?

a.	Card holders pay yearly membership fees.
b.	There is generally no spending limit.
c.	Generally, the balances due must be paid in full each month.
d.	All of the above.

19.

A written promise to pay based on a debtor’s excellent credit rating is known as

a.	a collateral loan	c.	a single-payment loan
b.	an installment	d.	a promissory note

20.

Which of the following is NOT a disadvantage of credit?

a.	careless buying	c.	overuse
b.	overbuying	d.	savings