131.

While credit scoring provides sound credit information, it is frequently NOT used in business
because
(a) the scoring information is difficult to obtain.
(b) scoring standards are too rigid.
(c) most business transactions involve mercantile credit which cannot be scored.
(d) mercantile credit decisions are easily quantifiable.
Answer: C
Level of Difficulty: 2
Learning Goal: 4
Topic: Credit Scoring

132. The most important of the five Cs of credit are

(a) collateral and capacity.
(b) capital and collateral.
(c) character and capacity.
(d) character and conditions.
Answer: C
Level of Difficulty: 2
Learning Goal: 4
Topic: Five Cs of Credit

133. The credit applicants character includes all of the following EXCEPT
(a) moral commitment to pay.
(b) level of liquid assets.
(c) past payment history.
(d) pending legal judgments.
Answer: B
Level of Difficulty: 2
Learning Goal: 4
Topic: Five Cs of Credit

134. As credit standards are relaxed, sales are expected to _________ and the investment in accounts
receivable is expected to _________.
(a) increase; increase
(b) increase; decrease
(c) decrease; decrease
(d) decrease; increase
Answer: A
Level of Difficulty: 2
Learning Goal: 4
Topic: Relaxing Credit Standards