CCA EXAM PREP 2026 LATEST UPDATE |
ACTUAL QUESTIONS + SOLUTIONS |
GUARANTEED PASS (NACM)
1. What is the primary purpose of credit analysis in accounts receivable management?
A. Increase marketing reach
B. Evaluate customer creditworthiness before extending credit
C. Reduce employee workload
D. Set product prices
Explanation: Credit analysis assesses risk of customer default before granting
credit.
2. Which financial statement is most useful for assessing a company’s liquidity?
A. Income statement
B. Statement of retained earnings
C. Balance sheet
D. Audit report
Explanation: The balance sheet shows current assets and liabilities.
3. What does “Days Sales Outstanding (DSO)” measure?
A. Inventory turnover
B. Profit margin
C. Average time to collect receivables
D. Debt ratio
Explanation: DSO indicates how quickly credit sales are collected.
4. A high DSO generally indicates:
A. Strong liquidity
B. Efficient collections
C. Slow collection of receivables
D. Low credit sales
Explanation: Higher DSO means customers take longer to pay.
5. What is the main purpose of a credit policy?
A. Increase advertising
B. Reduce production cost
C. Define rules for granting credit
D. Control payroll
Explanation: Credit policy standardizes credit decisions.
6. Which document is commonly used to request trade credit?
A. Debit memo
B. Bank statement
C. Credit application form
D. Income statement
Explanation: Customers complete credit applications to request terms.
7. What is credit risk?
A. Risk of currency fluctuation
B. Risk of customer defaulting on payment
, C. Risk of inventory loss
D. Risk of tax penalty
Explanation: Credit risk is the chance of non-payment.
8. Which ratio measures a company’s ability to meet short-term obligations?
A. Debt-to-equity ratio
B. Gross margin
C. Current ratio
D. Dividend ratio
Explanation: Current ratio compares current assets to liabilities.
9. A current ratio of less than 1 indicates:
A. Strong liquidity
B. No debt
C. Possible liquidity problems
D. High profitability
Explanation: Liabilities exceed assets.
10. What is the purpose of aging accounts receivable?
A. Increase sales
B. Reduce taxes
C. Classify receivables by due date
D. Calculate payroll
Explanation: Aging helps track overdue accounts.
11. Which of the following is a credit control tool?
A. Marketing campaign
B. Production schedule
C. Credit limit setting
D. Product pricing
Explanation: Credit limits restrict exposure to risk.
12. A credit limit refers to:
A. Minimum purchase amount
B. Maximum credit allowed to a customer
C. Interest rate charged
D. Discount offered
Explanation: It caps customer borrowing.
13. What is bad debt?
A. Overdue tax
B. Inventory loss
C. Uncollectible accounts receivable
D. Capital loss
Explanation: Bad debt cannot be collected.
14. Which method is used to estimate bad debts?
A. FIFO method
B. Straight-line method
C. Allowance method
D. Depreciation method
Explanation: It estimates uncollectible accounts in advance.
, 15. What is a credit memo?
A. Payment receipt
B. Invoice correction reducing amount owed
C. Document reducing customer balance
D. Loan agreement
Explanation: It adjusts customer credit downward.
16. What does liquidity refer to?
A. Profit generation
B. Asset depreciation
C. Ability to meet short-term obligations
D. Market expansion
Explanation: Liquidity is about cash availability.
17. Which factor is most important in credit scoring?
A. Office location
B. Employee count
C. Payment history
D. Product design
Explanation: Past payment behavior predicts future risk.
18. What is collateral?
A. Marketing asset
B. Asset pledged to secure credit
C. Tax document
D. Profit reserve
Explanation: Collateral reduces lender risk.
19. What is the purpose of collection letters?
A. Increase sales
B. Hire employees
C. Remind customers of overdue payments
D. Approve loans
Explanation: They prompt payment recovery.
20. What is credit evaluation?
A. Product inspection
B. Assessment of borrower’s ability to pay
C. Inventory check
D. Tax filing
Explanation: It evaluates financial reliability.
21. Which agency provides credit reports?
A. Central bank only
B. Marketing firms
C. Credit bureaus
D. Insurance companies
Explanation: Credit bureaus collect financial data.
22. What is a trade discount?
A. Tax refund
B. Reduction in list price for buyers
C. Loan interest
ACTUAL QUESTIONS + SOLUTIONS |
GUARANTEED PASS (NACM)
1. What is the primary purpose of credit analysis in accounts receivable management?
A. Increase marketing reach
B. Evaluate customer creditworthiness before extending credit
C. Reduce employee workload
D. Set product prices
Explanation: Credit analysis assesses risk of customer default before granting
credit.
2. Which financial statement is most useful for assessing a company’s liquidity?
A. Income statement
B. Statement of retained earnings
C. Balance sheet
D. Audit report
Explanation: The balance sheet shows current assets and liabilities.
3. What does “Days Sales Outstanding (DSO)” measure?
A. Inventory turnover
B. Profit margin
C. Average time to collect receivables
D. Debt ratio
Explanation: DSO indicates how quickly credit sales are collected.
4. A high DSO generally indicates:
A. Strong liquidity
B. Efficient collections
C. Slow collection of receivables
D. Low credit sales
Explanation: Higher DSO means customers take longer to pay.
5. What is the main purpose of a credit policy?
A. Increase advertising
B. Reduce production cost
C. Define rules for granting credit
D. Control payroll
Explanation: Credit policy standardizes credit decisions.
6. Which document is commonly used to request trade credit?
A. Debit memo
B. Bank statement
C. Credit application form
D. Income statement
Explanation: Customers complete credit applications to request terms.
7. What is credit risk?
A. Risk of currency fluctuation
B. Risk of customer defaulting on payment
, C. Risk of inventory loss
D. Risk of tax penalty
Explanation: Credit risk is the chance of non-payment.
8. Which ratio measures a company’s ability to meet short-term obligations?
A. Debt-to-equity ratio
B. Gross margin
C. Current ratio
D. Dividend ratio
Explanation: Current ratio compares current assets to liabilities.
9. A current ratio of less than 1 indicates:
A. Strong liquidity
B. No debt
C. Possible liquidity problems
D. High profitability
Explanation: Liabilities exceed assets.
10. What is the purpose of aging accounts receivable?
A. Increase sales
B. Reduce taxes
C. Classify receivables by due date
D. Calculate payroll
Explanation: Aging helps track overdue accounts.
11. Which of the following is a credit control tool?
A. Marketing campaign
B. Production schedule
C. Credit limit setting
D. Product pricing
Explanation: Credit limits restrict exposure to risk.
12. A credit limit refers to:
A. Minimum purchase amount
B. Maximum credit allowed to a customer
C. Interest rate charged
D. Discount offered
Explanation: It caps customer borrowing.
13. What is bad debt?
A. Overdue tax
B. Inventory loss
C. Uncollectible accounts receivable
D. Capital loss
Explanation: Bad debt cannot be collected.
14. Which method is used to estimate bad debts?
A. FIFO method
B. Straight-line method
C. Allowance method
D. Depreciation method
Explanation: It estimates uncollectible accounts in advance.
, 15. What is a credit memo?
A. Payment receipt
B. Invoice correction reducing amount owed
C. Document reducing customer balance
D. Loan agreement
Explanation: It adjusts customer credit downward.
16. What does liquidity refer to?
A. Profit generation
B. Asset depreciation
C. Ability to meet short-term obligations
D. Market expansion
Explanation: Liquidity is about cash availability.
17. Which factor is most important in credit scoring?
A. Office location
B. Employee count
C. Payment history
D. Product design
Explanation: Past payment behavior predicts future risk.
18. What is collateral?
A. Marketing asset
B. Asset pledged to secure credit
C. Tax document
D. Profit reserve
Explanation: Collateral reduces lender risk.
19. What is the purpose of collection letters?
A. Increase sales
B. Hire employees
C. Remind customers of overdue payments
D. Approve loans
Explanation: They prompt payment recovery.
20. What is credit evaluation?
A. Product inspection
B. Assessment of borrower’s ability to pay
C. Inventory check
D. Tax filing
Explanation: It evaluates financial reliability.
21. Which agency provides credit reports?
A. Central bank only
B. Marketing firms
C. Credit bureaus
D. Insurance companies
Explanation: Credit bureaus collect financial data.
22. What is a trade discount?
A. Tax refund
B. Reduction in list price for buyers
C. Loan interest
