HERCOR COLLEGE

Riverside Campus, Roxas Avenue, Roxas City

COLLEGE OF BUSINESS ADMINISTRATION

FIN1: PRINCIPLES OF MONEY, CREDIT AND BANKING
2nd Sem; AY: 2018-2019

MIDTERM EXAMINATION

NAME, YEAR AND SECTION: DATE:

GENERAL INSTRUCTIONS:
Only calculators, pens and papers are allowed during the exams. Cell phones should be in silent mode and kept inside the bag.
Strictly no texting or calling inside the classroom during the examination. STRICTLY NO ERASURES. Cheating (e.g., talking,
discussion, asking, looking and the likes) is strictly prohibited. Once caught, you are not allowed to finish the exam and you will
be given a grade of 5.0 for this particular exam. If you have questions, please ask the teacher instead.

SET A

I. MULTIPLE CHOICE (20 POINTS): Choose and select by encircling your best choice for each item.

1. The following are the elements which are present in credit, except:
a. ability to obtain a thing of value which may be in the form of cash or non-cash
b. promise to pay which should be acknowledged in writing by both parties
c. definite sum of money or money value for non-cash form of credit
d. none of these
2. STATEMENT 1: Character refers to the personality of the debtor, including his mental and moral attitudes.
STATEMENT 2: Capacity refers to the willingness of the debtor to pay the creditor.
a. True; True b. True; False c. False; True d. False; False
3. This is the possibility that the debtor may not fulfill his promise to pay the creditor. It shall be borne by the creditor.
a. business risk b. credit risk c. investment risk d. none of these
4. Under this credit, a replevin is applied. It is the creditor’s right to repossess the durable good or item under contract when the
debtor fails to fulfill his obligation.
a. charge accounts b. installment accounts c. revolving credit d. lay-away plan
5. They are also called “loan sharks” or usurers.
a. private individuals b. pawnshops c. banks d. credit unions
6. They accept deposits on which they pay interest or dividends only to their members, who have a common bond such as
employment, and extend small loans only to their members, usually for the purpose of buying consumer-durable goods.
a. savings and loans assoc. b. sales finance companies c. credit unions d. commercial banks
7. This document is evidence of a credit obligation resulting from a past transaction that establishes the responsibility of the
debtor to his creditor.
a. checks b. bonds c. bill of exchange d. credit instruments
8. This check has a current date on its face and can be encashed on demand.
a. open check b. crossed check c. certified check d. bouncing check
9. STATEMENT 1: A stale-dated check is a check with a date on its face or date of payment that is not more than six months.
STATEMENT 2: A traveler’s check is generally purchased by an individual before leaving for a trip outside the country.
STATEMENT 3: An overdraft check is a check issued using an insufficient depositor’s account to cover the check.
STATEMENT 4: An individual can be charged with crime of estafa for drawing an overdraft check.
a. only one statement is correct c. only three statements are correct
b. only two statements are correct d. all statements are correct
10. STATEMENT 1: A check is negotiated when it is transferred from one person to another.
STATEMENT 2: If the check is payable to order, it is negotiated by endorsement of the holder completed by delivery.
STATEMENT 3: The signature of the holder or endorser alone is sufficient endorsement.
STATEMENT 4: Endorsement is the signature of the drawee at the back of the negotiable instrument.
a. only one statement is wrong c. only three statements are wrong
b. only two statements are wrong d. all statement are wrong
11. In order for a credit instrument to be negotiable, it must conform to the following, except:
a. it must be in writing and signed by the drawer
b. it must contain a conditional promise or order to pay a certain amount of money
c. it must be payable on demand or at a fixed determinable future time
d. none of these
12. It prohibits further negotiation of the check when endorsement is in favor of a particular person only.
a. special endorsement b. blank endorsement c. restrictive endorsement d. qualified endorsement
13. It applies to checks payable to bearer.
a. special endorsement b. blank endorsement c. restrictive endorsement d. qualified endorsement
14. It applies to checks payable to order.
a. special endorsement b. blank endorsement c. restrictive endorsement d. qualified endorsement
15. This kind of endorsement makes the endorser as a mere assignor of the title to the check.
a. special endorsement b. blank endorsement c. restrictive endorsement d. qualified endorsement
16. STATEMENT 1: In accepting checks for payment, one must check if the date is current.
STATEMENT 2: If it is a company check, the corporate title must be indicated and all signatories must have signed it.
 STATEMENT 3: The payee must be the name an individual as the president of the corporation.
STATEMENT 4: Amount in words must not tally with the amount in figures.
a. Statement 1 is correct c. Statement 1, 2 and 4 are correct
b. Statement 1 and 2 are correct d. all of the above
17. A party who endorses without any conditions or qualification makes the following warranties, except:
a. the check is genuine and all respect what it purports to be
b. the endorser has good title to it
c. that all subsequent parties have the capacity to contract
d. that the check is, at the time of his endorsement, valid and subsisting
18. It is an interest-bearing bank deposit account that may be withdrawn only after a stipulated period of time and the interest
rate is higher than on savings bank deposit accounts.
a. savings deposit b. time deposit c. demand deposit d. NOW account
19. It is a bank deposit account that bears no interest; the depositor issues check or written order to pay to withdraw money.
a. demand deposit b. current account c. checking account d. all of these
20. STATEMENT 1: The right to composition is a provisional remedy compelling the debtor to deliver to the creditor any personal
property claimed or merchandise loaned for non-payment of obligation.
STATEMENT 2: The right to replevin is the will of the debtor at his own motion to voluntarily pay his creditors certain portions
of their claims in exchange for release from his liabilities.
STATEMENT 3: The right to garnishment is the provisional remedy by which the property of the debtor is taken into custody
of the law as a security for the satisfaction of any judgment which the creditor may recover.
STATEMENT 4: The right to attachment is the creditor’s option to request from the court a third party to hold and control the
property of the debtor during legal proceedings.
a. only one statement is wrong c. only three statement are wrong
b. only two statements are wrong d. all statements are wrong

II. IN WORDS AND IN FIGURES (10 POINTS): Write the following in words and in figures LEGIBLY as applicable.

1. P 3,568,296.33
2. Two hundred ninety eight thousand ninety three pesos and twenty one centavos
3. Two thousand one pesos
4. P 4,999,333.00
5. P 11, 268.11
6. Ninety one thousand one hundred six pesos
7. P 30,161.12
8. P 2,142,747,641.40
9. One hundred eleven pesos
10. Ten thousand thirty eight pesos

III. DRAW ME A CHECK (10 POINTS): The following are the parties to the credit instrument:
Ms. Raquel dela Cruz - Drawer
Ms. Ruth Santos - Payee
Metrobank, Roxas Avenue, Roxas City - Drawee Bank
With a face value of P 2,478,040.04, current date, and complete elements, prepare an open check:

END OF EXAMINATION

Prepared by:

JOHN KHEVIN V. LIMPOCO, CPA

Course Facilitator