Credit Managment knowledge test

Which of the following is a cash transaction?

• Purchase of a non-current asset on an installment basis

• Sale of goods for list price less 2% discount if paid within 7 days

• Payment of expenses on a credit card

• sale of non-current assets with terms of 30 days

Answer explanation

Anything which gives terms (we had 7 and 30) means it hasn't yet been paid. Similarly, reference to 'instalments' means some will still be owing.

Which of the following is a credit transaction

• Purchase of goods by cheque

• Purchase of a non-current asset in three installments

• sale of goods by credit card

• Delivery of goods to customer for cash

A customer receiving an invoice is part of the [what] cycle? Collection or ordering?

Establishing a customer's credit status is part of the [what] cycle? Collection or ordering?

Your business is offering credit terms of 30 days but if you pay within 10 days you pay 2% less. How would this be phrased on an invoice?

• Gross 30 dats net 20 days 2%

• Gross 30 days 2% discount for 10 days

• Net 30 days 2% discount for 10 days

• Net 30 days 2% discount for 20 days

Which of the following would be relevant for assessing credit worthiness of an existing customer?

• Bank reference

• Aged receivables list

• Sales representatives knowledge

• Credit Agency reference

• Analysis of recent financial statements

Which of the following is a measure of liquidity?

• Making a profit

• Ability to pay when debts fall due

• Ability to raise finance

• Ability to pay dividends when due

Which of the following would be relevant for assessing credit worthiness of a new customer?

• Bank Reference

• Credit agency reference

• Trade reference

• Financial statements analysis

• Aged receivables listing