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