PAMANTASAN NG LUNGSOD NG MARIKINA

CONCEPCION DOS , MARIKINA CITY

CREDIT AND COLLECTION

1. THE BIRTH OF CREDIT

THE WORD CREDIT COMES FROM THE LATIN WORD “CREDENCE” WHICH MEANS TO TRUST.
NECESSITY GAVE BIRTH TO CREDIT AND UP TO THE PRESENT HAS PASSED THROUGH A LONG
PROCESS, EVOLUTION AND DEVELOPMENT.

CREDIT IS DEFINED AS THE CAPABILITY TO OBTAIN GOODS AND SERVICES IN EXCHANGE TO A

PROMISE TO PAY AT A LATER DATE. IT IS ALSO THE POWER TO OBTAIN MONEY BY
BORROWING IN EXCHANGE FOR A PROMISE WHETHER WRITTEN OR ORAL TO PAY THE
OBLIGATION IN THE FUTURE.

CREDIT REPRESENTS THE PROMISE OF A DEBTOR TO A FUTURE PAYMENT OF AN OBLIGATION

OR DEBT.

CREDIT HAS SUFFERED FROM MANY MISCOMMUNICATIONS, HOWEVER, JOHN STUART MILLS
APTLY SAYS IT ALL “CREDIT IS THE PERMISSION TO USE ANOTHER PERSON’S CAPITAL”.

11. THE NATURE OF CREDIT

CREDIT MAY BE SEEN TWO WAY STREET WHICH INVOLVES THE CREDITOR AND DEBTOR. IT IS
BASED ON THE DEFERRED PAYMENTS. TO THE DEBTOR IT IS A POWER. THE POWER TO
OBTAIN
GOODS AND SERVICES WITHOUT ACTUALLY PAYING CASH FOR IT ALL AS INSTANCE. A
PROMISE TO PAY TO PAY IS MADE. WHICH GIVES RISE TO THE OBLIGATION ON THE PART OF DEBTOR.

THERE ARE TWO BROAD CATEGORIES OF CREDIT, NAMELY, PRIVATE AND PUBLIC. PUBLIC CREDIT IS
PRIMARILY CONCERNED WITH PUBLIC FINANCE. PRIVATE CREDIT is further divided into
consumer/personal and business credit.

111. USERS OF CREDIT

CREDIT IS UNIVERSALLY USED BY ALL KINDS OF PEOPLE FROM ALL WALKS OF LIFE.
HOMEOWNERS ARE ONE OF THE MOST BIGGEST USERS OF CREDIT, IF NOT THE HIGHEST. EVERYDAY
PEOPLE BUY GOODS FROM THEIR NEIGHBORHOOD SARI-SARI STORE ON CREDIT. THE ACCUMULATED
AMOUNT OF DEBTS MADE BY HOMEOWNERS IS SO BIG IN TERMS OF NUMBER., ATTESTING THE FACT
THAT THE PRIVATE SECTORS ESPECIALLY, HOMEOWNERS ARE THE BIGGEST USERS OF CREDIT.

BUSINESS ENTERPRISES COMPOSE THE OTHER BULK OF USERS OF CREDIT. BUSINESSMEN USE CRDIT
TO START THEIR OWN BUSINESS OR TO EXPAND EXISTING BUSINESS. MOST ENTREPRENEURS RELY ON
CREDIT TO KEEP THEIR BUSINESS GROWING.

CREDIT IS ALSO USED WIDELY BY THE GOVERNMENT. WHEN THE NATIONAL EXPENDITURES EXCEEDS
INCOME GOVERNMENT USES CREDIT TO FINANCE PROJECTS WHEN FUNDS ARE NOT AVAILABLE.

IV. FUNCTIONS OF CREDIT

CREDIT IN OUR SOCIETY [PERFORM VARIOUS FUNCTIONS. THESE FUNCTIONS ARE CLASSIFIED INTO
ECONOMIC, SOCIAL AND MANAGERIAL.
 AS AN ECONOMIC FUNCTION CREDIT SERVICES FIRST AND FOREMOST AS A MEDIUM OF
EXCHANGE. CREDIT FACILITATES TRANSACTIONS. THEREBY ALLOWING BUSINESS TRANSACTIONS TO
BE DONE QUICKLY, EASILY AND WITH FEWER HASSLES. CREDIT MINIMIZES RISK AND EFFORT.
AS AN SOCIAL FUNCTION CREDIT INDUCES INDEPENDENCE OF THOUGH AND ACTION. IT ENABLES
INDIVIDUALS TO SEEK BETTER ALTERNATIVES TO HOARDING FUNDS. IT ENHANCES PEOPLE TO INVEST
IN BUSINESS WHICH WILL PROVIDE THEM PROFIT IN THE LONG RUN. THESE FUNS MADE AVAILABLE
BY CREDIT ALSO HELP OTHER ENTREPRENEURS TO CREATE BUSINESS WHERE THEY CAN USE THE
MONEY OBTAINED FROM CREDIT PROFITABLY AND CREATIVELY.
AS A MANAGERIAL FUNCTION, IT SERVES AS A TOOL FOR BUSINESS PROMOTION. CREDIT ALLOWS
CONSUMERS TO BUY PRODUCTS AND SERVICES FROM THESE BUSINESS ON CREDIT. HENCE,
INCREASING SALES AND PROVIDING A WIDER MARKET.

V. ROLE OF CREDIT IN THE ECONOMIC AND SOCIAL ENVIRONMENT

CREDIT PLAYS AN IMPORTANT ROLE IN ALL ASPECT OF BUSINESS TRANSACTIONS. IN THE
ECONOMIC SETTING CREDIT SEEN AS A CAUSE AND EFFECT OF DIFFERENT CIRCUMSTANCES. CREDIT
INCREASES VOLUME OF SALES, OPENS NEW MATERIALS, HELPS SELLING AND SATISFIES CUSTOMERS.
HOWEVER, CREDIT DOES NOT CAUSE BUSINESS TO GROW ONLY BUT ALSO IT IS AN EFFECT TO
DIFFERENT CIRCUMSTANCES. IT IS THE EFFECT OF THE ECONOMIC CONDITION. IN A COUNTRY LIKE
THE PHILIPPINES, WHERE THE ECONOMY IS BECOMING PRODUCTIVE CREDIT IS SEEN AS AN INTEGRAL
PART OF ANY BUSINESS TRANSACTIONS. THE RISE OF PRODUCTIVITY CREATED THE NEED OF CREDIT.
IT BECAUSE OF THE ECONOMIC GROWTH THAT CREDIT CAME TO BE.

V1. TYPES OF CREDIT

PUBLIC CREDIT DEALS PRIMARILY WITH ALL GOVERNMENT TRANSACTIONS MADE ON CREDIT. THE
GOVERNMENT USED OF CREDIT IS FOR THE PROPER DISCHARGE OF ALL NATIONAL RESPONSIBILITIES.
FOR THE GOVERNMENT CREDIT IS A TOOL WHICH CAN BE USED TO FULFILL ITS OBLIGATIONS AND
PROJECTS WHEN FUNDS FROM TAXES ARE NOT AVAILABLE.
PRIVATE CREDIT IS BROADER THAN PRIVATE CREDIT. IT REFERS TO ALL TRANSACTIONS MADE BY
PRIVATE ENTITIES SUCH AS CONSUMERS AND BUSINESS. IT IS FURTHER DIVIDED INTO BUSINESS
CREDIT, REAL ESTATE CREDIT, AND CONSUMER CREDIT.
IN BUSINESS, CREDIT IS A MEANS TO AN End. IT IS AN OPPORTUNITY TO BUSINESSMAN TO
ENGAGE IN A PRODUCTIVE ACTIVITY WHICH WILL GIVE HIM PROFIT IT CREATES BUSINESS
OPPORTUNITY.
1. INVESTMENT CREDIT- THE FIRST KIND OF BUSINESS CREDIT WHICH IS USED BY BUSINESSMEN.
IT USED TO OBTAIN FUNDS NEEDED TO BUY THE ASSETS REQUIRED BY THE COMPANY AND
MAINTAIN THE DAILY OPERATION OF THE BUSINESS. IF INVESTMENTS HAS NO AVAILABLE
FUNDS TO FINANCE THE NEW PROJECT, AS FOR AN EXAMPLE THE NEED TO BUY LAND FOR
THE OFFICE SPACE THE BUSINESSMAN RESORTS TO INVESTMENT CREDIT. IT IS OBTAINED
THROUGH THE issuance of long-term obligations by making a promise to pay at a later date,
the funds that may be obtained now. These obligations are long-term in nature and payments
include finite sums of principal and interest.
2. INTERMEDIATE CREDIT- ASIDE FROM INVESTMENT CREDIT BUSINESSMEN ALSO USED THIS
TYPE OF CREDIT. IT IS USED TO FINANCE THE ENLARGED USE OF OFFICE EQUIPMENT AND
MACHINERY AND OTHER AND ANOTHER COMPANY'S NEEDS THAT ARE CYCLICAL IN
NATURE.THE PURPOSE OF THIS CREDIT IS TO REFINE BUSINESS ACTIVITIES.
3. SHORT-TERM CREDIT- A FORM OF BUSINESS CREDIT COMPOSED OF THREE KINDS
2.1. MERCANTILE CREDIT OR COMMERCIAL CREDIT- USED BY BUSINESSMEN IN HIS DAILY
OPERATIONS. A CREDIT THAT ONE ENTREPRENEUR EXTENDS TO ANOTHER SELLING
 GOODS OR SERVICES. IT IS DEFINED AS THE POWER TO OBTAIN GOODS AND SERVICES FOR
BUSINESS PURPOSES IN EXCHANGE FOR A PROMISE TO PAY AT A LATER DATE. IT
FACILITATES THE PRODUCTION OF GOODS BECAUSE IT ALLOWS BUSINESSMEN TO OBTAIN
GOODS AND SERVICES THAT COMPLETE THE PRODUCTION OF THEIR PRODUCTS FROM
RAW MATERIALS NEED TO ITS MARKETING STAGE. HOWEVER, IT DOES NOT INCLUDE
CREDIT EXTENDED TO INDIVIDUAL CONSUMERS WHEN BUYING GOODS ON CTEDIT
EXTENDED TO RETAILERS.
2.2. SHORT-TERM CASH CREDIT- CREDIT USED BY BUSINESSMEN TO FACILITATE THER
BUSINESS TRANSACTIONS AND THEY PROMISE TO PAY WITHIN ONE YEAR. CASH CREDIT
CAN BE OBTAINED THROUGH THE SALE OF COMMERCIAL PAPER OR LOANS GRANTED BY
BANKS IN AN UNSECURED BASIS.
2.2. DEPOSIT CREDIT- DEFINED AS THE POWER THAT ENABLES FINANCIAL INSTITUTION TO
ATTRACT FUNDS OF DEPOSITORS. THEREFORE, DEPOSIT CREDIT MAINLY USED BY
FINANCIAL INSTITUTION SUCH AS SAVINGS AND COMMERCIAL BANKS A DEPOSIT
TRANSACTION IS PURELY DEALING CREDIT.

4. REAL ESTATE CREDIT- ANOTHER KIND OF PRIVATE CREDIT. IT IS ALSO REFERRED TO AS

MORTGAGE CREDIT BECAUSE IT IS A KIND OF CREDIT WHEREIN THE LENDER IS GIVEN REAL
ESTATE MORTGAGE AS A SECURITY FOR A LOAN.
4.1.SOURCES OF REAL ESTATE MORTGAGES.
A. COMMERCIAL BANKS
B. SAVINGS AND LOAN ASSOCIATIONS
C. MUTUAL SAVING BANKS
D. MORTGAGE COMPANIES
5. CONSUMER CREDIT- A PRIVATE CREDIT GRANTED TO CONSUMERS TO FACILITATE THE
PROCESS OF CONSUMPTION. IT IS THE ABILITY OF THE CONSUMER TO OBTAIN GOODS AND
SERVICES OR BORROW MONEY FOR PERSONAL CONSUMPTION PURPOSES WITH THE
PROMISE TO PAY AT A LATER DATE. IT IS USED BY THE CONSUMERS FOR THE FOLLOWING
PURPOSES;
5.1.CONVENIENCE
5.2.DESIRE TO IMPROVE QUALITY OF LIFE
5.3.EMERGENCY
PRODUCTS AND GOODS ARE EASIER TO PRODUCE BECAUSE OF CREDIT. IT HAS ALSO
IMPROVED THE STANDARD OF LIVING OF SOME OF OUR COUNTRYMEN BECAUSE IT ALLOWED
LAYMEN TO IMPROVE THEIR PRESENT CONDITION IN LIFE. HUMAN WANS HAVE ALSO MADE
CREDIT NECESSARY. WHEN OUR FUNDS ARE DEPLETED, WE CAN ALWAYS TURN TO
CONSUMER CREDIT TO TIDE US DURING OUR HARD TIMES.

V11. CREDIT INSTRUMENTS

1. THESE ARE DOCUMENTS THAT SERVE AS PIECES OF EVIDENCE OF ANY CREDIT TRANSACTIONS.
THESE INSTRUMENTS S=ESTABLISH OBLIGATION OF THE CREDITOR AND DEBTOR THAT CAME
ABOUT BECAUSE OF THE CREDIT TRANSACTION. ALL CREDIT INSTRUMENTS HAVE THE
FOLLOWING FEATURES;
● A PROMISE OR ORDER OF FUTURE PAYMENT
● RISK
● ESTABLISHMENT OF DEBTOR/CREDITOR RELATIONSHIP.
2. THERE ARE TWO BROAD CATEGORIES OF CREDIT INSTRUMENTS
● BASED ON ACCEPTABILITY
 A. GENERALLY ACCEPTABLE-MONEY OR CURRENCY
B. LIMITED ACCEPTABILITY- PROMISES TO PAY AND ORDERS TO PAY
PROMISES TO PAY INCLUDE BOOK ACCOUNTS, PROMISSORY NOTES AND BONDS.
● AS TO FUNCTION
A. CREDIT MONEY- STRESSES ITS USES AS A MEDIUM OF EXCHANGE
B. COMMERCIAL CREDIT INSTRUMENTS- FACILITATE THE USE OF SHORT-TERM CREDIT
C. INVESTMENT CREDIT INSTRUMENTS-INCLUDE THOSE USED FOR LONG-TERM CREDIT.
● AS TO NEGOTIABILITY
A. NEGOTIABLE- USED FOR FURTHER TRANSACTIONS WHICH MUST BE:
1. IN WRITING
2. THERE MUST BE UNCONDITIONAL PROMISE OR UNCONDITIONAL ORDER
3. DETERMINABLE FUTURE TIME
4. MUST BE SIGNED BY THE DRAWER OR MAKER
5. INDICATOR OF SUM OF MONEY
6. MUST BE PAYABLE TO BEARER OR ORDER
3. OPEN BOOK ACCOUNTS- THE EARLIEST AND SIMPLEST KIND OF CREDIT INSTRUMENT. A
SIMPLE NOTE MADE BY THE CREDITOR IN THE LIST OF EXISTING CUSTOMERS THE ENTRY IS A
WRITTEN RECORD OF CREDIT TRANSACTION KEPT IN THE LEDGER OF THE CREDITOR. OPEN
BOOK ACCOUNT IS USED WHEN A CUSTOMER BUYS PRODUCT FROM A STORE WHERE THE
TRANSACTION IS RECORDED IN HIS BOOK AND USUALLY HANDS A RECEIPT WHICH
ACKNOWLEDGES THE DELIVERY OF THE GOODS.
OPEN BOOK ACCOUNT IS FLEXIBLE, THE TIME FOR PAYMENT CAN BE EXTENDED AND
CHANGES CAN BE MADE. IT IS CONDUCTED WITH A SPEED AND EASE AND IT WORKS ON
TRUST, WHICH THEREFORE, FLATTERS THE CUSTOMERS.
3.1. ADVANTAGES OF OPEN BOOK ACCOUNTS
A. CONVENIENT
B. ABSENCE OF LEGAL EVIDENCE
C. SIMPLE
D. PROMPT PAYMENT
3.2. DISADVANTAGES
A. MAY LEAD TO DISPUTES AND MISUNDERSTANDING
B. PAYMENT IS DEPENDENT ON THE DEBTOR'S VOLUNTARY ACTION
C. NO WRITTEN INSTRUMENT THUS, LACK OF NEGOTIABILITY
4. PROMISSORY NOTES-TYPE OF CREDIT INSTRUMENT WHICH IS A WRITTEN PROMISE TO PAY A
DEFINITE SUM OF MONEY AT A TIME SPECIFIED IN THE FUTURE SIGNED BY THE MAKER WHO
PROMISE TO PAY.
IT IS USED BY THE BANK CREDITS AND IN PERSONAL LOAN CREDIT. ITS IS ALSO USED WHEN
THE DEBTOR WANTS TO EXTEND TOR WANTS TO EXTEND TOR WANTS TO EXTEND HIS TIME
FOR PAYMENT. THIS TYPE IS UTILIZED EITHER BY COMMERCIAL ENTERPRISES OR BANKS.
MANY OF THESE TYPES OF NEGOTIABLE BUT NOT ALL POSSESSED NEGOTIABILITY.
● ADVANTAGES
A. THERE IS A TANGIBLE PROOF OF DEBT
B. THERE IS FIXED TIME FOR PAYMENT
C. PROMPT PAYMENT CAN BE EXPECTED
D. COMMANDS HIGHER VALUE OF ASSET
E. NO OPPORTUNITY TO DISPUTE THE QUALITY OR QUANTITY OF GOODS PURCHASED
ON CREDIT.
● DISADVANTAGES
 A. INFLEXIBILITY OF PROMISSORY NOTE
B. INCONVENIENCE ON THE PART OF THE DEBTOR BECAUSE OF LIMITED USED
C. NO CHOICE TO OFFER CASH DISCOUNT TO OFFER.
5. BONDS-ANOTHER CREDIT INSTRUMENT BASED ON PROMISE TO PAY, WHICH ARE ISSUED BY
CORPORATIONS TO RAISE FUNDS FOR THE PURCHASE OF PERMANENT WORKING CAPITAL.
BONDS ARE PROMISES TO PAY AT A CERTAIN FIXED DATE IN THE FUTURE. AND MAYBE
NEGOTIABLE OR NON-NEGOTIABLE AND ARE OFTEN USED FOR SECURITY LOANS. BONDS
ALTHOUGH MANY ARE OF VERY COMMON FORM OF CREDIT INSTRUMENTS NONETHELESS ITS
SIGNIFICANT FEATURES PROVIDE ATTRACTION TO MANY INVESTORS ESPECIALLY IN THE
MONEY MARKET SITUATIONS.
6. COLLATERAL- THESE ARE OBJECT OF VALUES USED BY PEOPLE TO SERVE AS A PLEDFGE THAT
GUARANTEES PAYMENT OF AN OBLIGATION. LOANS OR CREDITS CAN BE SECURED BY USING
COLLAGTERALS. IF THE DEBTOR CAN NOT PAY THE LOAN OR CREDIT THE CREDITOR THEN
TAKES AND SELLS THE COLLATERAL, WHICH SERVES AS PAYMENT FOR THE OBLIGATION. MOST
OFTEN THAN NOT, COLLATERAL IS USE TO SECURE LOANS FROM BANKS OR FINANCING
INSTITUTIONS.
5.1. FORMS OF COLLATERALS
A. DOCUMENT OF OWNERSHIP-BILL OF LADING, TRUST RECEIPTS, WAREHOUSE RECEIPTS
A. STOCKS AND BONDS- USUALLY USED TO SECURE BANK LOANS, AND ARE ALSO
UTILIZED BY INDIVIDUALS AS COLLATERAL FOR LOANS TO BE PAID IN ONE
TRANSACTION. STOCK ARE FORMS OWNERSHIP WHILE BONDS ARE MORE OF FORM
OF OBLIGATIONS.
B. MORTGAGES-USED TO SECURE BANK LOANS AND WHEN PAYMENT OF LOAN IS NOT
MADE. BANKS ARE LENDING INSTITUTIONS THAT SELL MORTGAGES. THIS CAN BE
CHATTEL MORTGAGE WHICH ARE PERSONAL PROPERTY AND REAL ESTATE
MORTGAGE WHICH ARE REAL PROPERTY.
C. ASSIGNMENT OF ACCOUNTS RECEIVABLES-THE TRANSFER OF ACCOUNTS BY THE
CREDITOR TO ANY FINANCIAL INSTITUTIONS, IN ORDER TO SECURE LOANS. HIS IS
USED WIDELY BY BUSINESS FIRMS TO OBTAIN LOANS TO FINANCE WORKING CAPITAL.
7. LIFE INSURANCE- LIFE INSURANCE AND CREDIT LIFE INSURANCE ARE CONSIDERED SPECIAL
COLLATERAL. LIFE INSURANCE IS USED FOR SINGLE PAYMENT PERSONAL LOANS WHILE CREDIT
LIFE INSURANCE BECOMES REAL COLLATERAL UPON THE DEATH OF THE INSURED DEBTOR.
V111. SHORT BACKGROUND HISTORY OF THE DEVELOPMENT OF CREDIT IN THE PHILIPPINES
THE MAJORITY OF THE BUSINESSMEN ENGAGED IN CREDIT GENERALLY AGREE THAT THE
ACTUAL AND FULL CONCEPT OF CREDIT IS NOT FULLY UNDERSTOOD BY MANY PEOPLE. FIRMS
ENGAGED IN CREDIT SELLING OFTEN FAIL BECAUSE THE SEVERAL REASONS. MANY
COMPANIES HAVE MANY RECORDS THAT SHOW TO BUYERS AND CUSTOMERS, A 30 DAYS
TERM MAY MEAN ANYWHERE BETWEEN 90 AND 120 DAYS. TO SOME BUYERS THIS COULB
MEAN PAYING FOR ANY OVERDUE ACCOUNT THE NEXT TIME THEY PLACE THEIR NEXT ORDER
WHICH DEPENDS ON THE NEEDS OF THE BUYER NOT ON THE TERMS OF PAYMENT AND WHY
THIS SO, IT =IS NECESSARY TO TRACE BACK THE DEVELOPMENT OF CREDIT.
BEFORE WORLD WAR 11, CREDIT WAS VERY SIMILAR TO DEBT. (UTIANG). ATTACHED TO IT
ARE NEGATIVE IMPRESSIONS. FOR BOTH THE RICH AND POOR CREDIT WAS MORE OF A GREAT
BURDEN. OFTEN REFERRED TO AS INDEBTEDNESS, REGARDLESS OF PROMPTNESS OF
PAYMENT. HAVING NO DEBT WAS CONSIDERED AS A SYMBOL OF HIGH STATUS.
CUSTOMARILY, CREDIT TRANSACTIONS APPLIED ONLY TO PEOPLE WITH LOW CREDIBILITY.
THOSE WHO INCURRED DEBT WHERE THE TRULY NEEDY, OR THOSE OUT TO DEFRAUD MONEY
LENDERS. MANY CREDITORS COME FROM POOR FAMILIES WHO ARE PERPETUALLY INDEBTED
 AND HAVE TO DEPEND ON CRDDIT IN ORDER TO SURVIVE. THEUS, DURING THE PERIOD OF
POOR COLLECTION AND MANY FORECLOSURES BECOME PREVALENT AND PEOPLE WERE
CONDITIONED TO BELIEVE THAT ONE MJUST PAY HIS DEBTS, NO MATTER HOW DELAYED.
OTHERWISE, WE WILL HAVE TO FACE COURT PROCEEDINGS. HOWEVER, THERE WERE A FEW
WHO DO NOT SEE CREDIT IN A TOTALLY NEGATIVE LIGHT. IN THE 19 TH CENTURY THERE WAS
ALREADY AN ASSOCIATION OF CREDIT MEN INC. WHICH TOOK CARE OF THE NEEDS OF THE
RESIDENTS AND BUSINESS IN METROPOLITAN AREAS.
AFTER THE WAR AND DURING THE PROCESS OF REHABILITATION, MANY BUSINESS STARTED
TO PICK-UP. FIRMS BEGAN TO MUSHROOM AND SO MORE DURABLE ITEMS BECAME
AVAILABLE TO THE PEOPLE. AFTER EXPERIENCING DEPRIVATION AND WANT, PEOPLE WERE
SO HUNGRY WITH GOODS. BIG MARKET WAS EXPERIENCED BUT BECAUSE PEOPLE HAVE NOT
MONEY AND NO CASH TO BUY THEY RESORTED TO CREDIT.

IX. QUIZ 1. IDENTIFICATION

1. IDENTIFY THE ITEMS BEING REFERRED TO THE FOLLOWING QUESTIONS:
1. THE CAPACITY TO OBTAIN GOODS AND SERVICES IN EXCHANGE FOR A PROMISE TO
PAY AT A LATER DATE.
2. PRIMARILY CONCERNED WITH PUBLIC TRANSACTIONS.
3. USED TO OBTAIN FUNDS TO BUY ASSETS REQUIRED BY THE COMPANY AND TO
MAINTAIN DAILY OPERATIONS OF THE BUSINESS.
4. TYPE OF CREDIT USED BY BUSINESSMEN IN THEIR DAILY OPERATIONS.
5. CREDIT FUNCTION SERVES AS FIRST AND FOREMOST AS A NEDIUM OF EXCHANGE.
11. WRITE TRUE IF THE STATEMENT IS CORRECT AND FALSE IF IT IS NOT.
1. PRIVATE CREDIT DEALS WITH ALL GOVERNMENT TRANSACTIONS.
2. CASH CREDIT IS A SHORT-TERM TYPE OF CREDIT USED BY BUSINESSMEN.
3. CONSUMER CREDIT IS GRANTED TO CONSUMERS TO FACILITATE PROCESS
CONSUMPTION.
4. SHORT-TERM CREDIT PAYABLE WITHIN A YEAR.
5. PUBLIC CREDIT IS BROADER THAN PRIVATE CREDIT.
111 ENCIRCLE THE LETTER THAT CORRESPOND TO YOUR ANSWER.
1. TYPE OF CREDIT DEALS WITH ALL KINDS OF GOVERNMENT OR NATIONAL FINANCE
A. PUBLIC CREDIT
B. PRIVATE CREDIT
C. CONSUMER CREDIT
D. DEPOSIT CREDIT
2. CREDIT FUNCTION WHICH ALLOWS BUSINESSES PRODUCE CAPITAL
A. INVESTMENT CREDIT
B. MERCANTILE CREDIT
C. DEPOSIT CREDIT
D. MERCANTILE CREDIT
3. CREDIT INSTRUMENT THAT IS GENERALLY ACCEPTABLE
A. MONEY
B. PROMISSORY NOTE
C. BANK DOCUMENT
D. BONDS
4. THE OLDEST AND SIMPLEST TYPE OF CREDIT INSTRUMENT
A. OPEN BOOK ACCOUNT
B. COLLATERAL
 C. BONDS
D. STOCKS
5. KIND OF CREDIT WHERE A LOAN IS SECURED BY THE USED OF REAL ESTATE,
A. DEPOSIT
B. MERCANTILE
C. SHORT-TERM
D. REAL ESTATE
IV. ANSWER THE FOLLOWING QUESTIONS BRIEFLY
1. EXPLAIN THE IMPORTANCE OF CREDIT
2. DESCRIBE THE FUNCTIONS OF CREDIT
3. DISCUSS THE TYPES OF CREDIT INSRUMENTS