Hire Purchase And Installment Payment Accounts - Terminologies - SS3 Accounting Past Questions and Answers - page 1
1
What is a deposit in a hire purchase account?
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A
The regular payments made by the buyer to the seller
B
The final payment due at the end of the hire purchase agreement
C
The initial amount paid by the buyer at the time of signing the hire purchase agreement
2
What is a balloon payment in a hire purchase account?
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A
A large final payment due at the end of the hire purchase agreement
B
The regular payments made by the buyer to the seller
C
The interest charged by the seller on the outstanding balance of the purchase price
3
When does the ownership of the asset transfer from the seller to the buyer in a hire purchase agreement?
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A
At the time of signing the agreement
B
After the deposit has been paid
C
After all payments, including the balloon payment, have been made
4
What happens if the buyer fails to make the required payments in a hire purchase agreement?
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A
The seller may terminate the hire purchase agreement and repossess the asset
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B
The seller may reduce the instalment payments
C
The buyer will automatically own the asset
5
What is the interest charged on in a hire purchase agreement?
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A
The deposit paid by the buyer
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B
The regular payments made by the buyer to the seller
C
The outstanding balance of the purchase price
7
What is the default in a hire purchase agreement?
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