MCQ 1: Under the hire purchase system, ownership of the goods is transferred to the buyer:
(A) At the time of signing the agreement.
(B) At the time of taking possession of the goods.
(C) After payment of the last installment.
(D) When a certain percentage of the total price is paid.
Answer: (C) After payment of the last installment.
MCQ 2: In a hire purchase transaction, the initial payment made by the buyer is called:
(A) Down payment.
(B) Installment payment.
(C) Cash price.
(D) Hire purchase price.
Answer: (A) Down payment.
MCQ 3: Under the installment payment system, the seller has the right to repossess the goods:
(A) If any installment is defaulted.
(B) If the buyer becomes insolvent.
(C) If the buyer intentionally damages the goods.
(D) In all the above cases.
Answer: (A) If any installment is defaulted.
MCQ 4: The hire purchase price is calculated as:
(A) Cash price plus interest.
(B) Cash price minus interest.
(C) Cash price plus down payment.
(D) Down payment plus interest.
Answer: (A) Cash price plus interest.
MCQ 5: The relationship between the seller and buyer in a hire purchase agreement is that of:
(A) Seller and buyer.
(B) Lessor and lessee.
(C) Bailor and bailee.
(D) Lender and borrower.
Answer: (C) Bailor and bailee.
MCQ 6: In an installment payment system, the ownership of goods is transferred to the buyer:
(A) Immediately upon delivery.
(B) After the final installment is paid.
(C) At the time of the agreement.
(D) When the buyer starts using the goods.
Answer: (A) Immediately upon delivery.
MCQ 7: Under the hire purchase system, the interest charged is usually calculated on:
(A) The outstanding cash price.
(B) The total hire purchase price.
(C) The down payment.
(D) The first installment.
Answer: (A) The outstanding cash price.
MCQ 8: The document that governs the installment payment system is:
(A) The Hire Purchase Act.
(B) The Sale of Goods Act.
(C) The Contract Act.
(D) The Transfer of Property Act.
Answer: (B) The Sale of Goods Act.
MCQ 9: If the buyer defaults on an installment in an installment purchase agreement:
(A) The seller can repossess the goods.
(B) The buyer can claim a refund for the installments paid.
(C) The seller has to renegotiate the payment terms.
(D) The buyer has to pay a penalty.
Answer: (A) The seller can repossess the goods.
MCQ 10: The main difference between a hire purchase and an installment purchase system is:
(A) The amount of interest charged.
(B) The timing of ownership transfer.
(C) The number of installments.
(D) The type of goods involved.
Answer: (B) The timing of ownership transfer.
MCQ 11: In a hire purchase agreement, the “hire vendor” is:
(A) The person who buys the goods on hire purchase.
(B) The person who sells the goods on hire purchase.
(C) The person who finances the hire purchase agreement.
(D) The person who maintains the goods.
Answer: (B) The person who sells the goods on hire purchase.
MCQ 12: In a hire purchase transaction, the amount of interest is typically:
(A) The same for each installment.
(B) Higher for later installments.
(C) Higher for earlier installments.
(D) Variable depending on the market rate.
Answer: (C) Higher for earlier installments.
MCQ Questions
Financial Accounting MCQ on Hire Purchase System
Financial Accounting MCQ on Hire Purchase System. Hire purchase act enacted in the year
(a) 1971
(b) 1972
(c) N
(d) 1974
Answer (b) 1972
2. Hire purchase act came in to force with effect from
(a) 1st Sept 1972
(b) 1st Sept 1973
(c) 1st Sept 1974
(d) 1st Sept 1975
Answer (b) 1st Sept 1973
3. In Hire purchase system, Hire purchase price comes under section
(a) Sec 2(d)
(b) Sec 3(d)
(c) Sec 4(d)
(d) Sec 5(d)
Answer (a) Sec 2(d)
4. In hire purchase system, Net hire purchase price comes under section
(a) Sec 8(1)(e)
(b) Sec 8(2)(e)
(c) Sec 8(3)(e)।
(d) Sec 8(4)(e)
Answer (a) Sec 8(1)(e)
5. Net hire purchase price excluded
(a) Delivery expenses
(b) Registration fees
(c) Cost of insurance
(d) All of the above
Answer (d) All of the above
6. In Hire purchase system, Net hire purchase charges comes under section
(a) Sec 8(1)(d)
(b) Sec 8(1)(e)
(c) Sec 8(1)(f)
(d) Sec 8(1)(g)
Answer (a) Sec 8(1)(d)
7. In Hire purchase system, Cash price comes under
(a) Sec 4(1)(a)
(b) Sec 4(1)(b)
(c) Sec 4(1)(c)
(d) Sec 4(1)(d)
Answer (b) Sec 4(1)(b)
8. The amount paid at the time of hire purchase agreement is known as
(a) Installment
(b) Down payment
(c) Cash price
(d) Hire purchase price
Answer (b) Down payment
9. In hire purchase system cash price plus interest is known as
(a) Book value of assets
(b) Capital value of assets
(c) Hire purchase price of assets
(d) Hire purchase charges
Answer (c) Hire purchase price of assets
10. Depreciation on hire purchase assets is claimed by
(a) Vendor
(b) Hire purchaser
(c) Buyer
(d) Seller
Answer (b) Hire purchaser
11. Under installment payment system ownership of goods
(a) Is transfer at the time of agreement
(b) Is transfer at the time of last installment
(c) Is not transfer
(d) None of the above
Answer (a) Is transfer at the time of agreement
12. The persons who obtained delivery of possession of goods from the owner under the hire
purchase agreement is known as
(a) Purchaser
(b) Hirer
(c) Vendor
(d) None of the above
Answer (b) Hirer
13. The different between the net hire purchase price and net cash price of the goods is termed
as
(a) Hire purchase charges
(b) Installment
(c) Down payment
(d) None of the above
Answer (a) Hire purchase charges
14. In hire purchase system, cash price instalment comes under section
(a) Sec 7(1)(a)
(b) Sec 7(1)(b)
(c) Sec 7(1)(c)
(d) Sec 7(1)(d)
Answer (a) Sec 7(1)(a)
15. The sum payable periodically by the hirer under the agreement
(a) Installment
(b) Consolidation
(c) Hire
(d) None of the above
Answer (c) Hire
16. Section of Right of owner to termination
(a) Sec 17
(b) Sec 18
(c) Sec 19
(d) Sec 20
Answer (c) Sec 19
17. The hire purchaser may terminate the hire purchase agreement after giving the owner at
least …..Days’ notice in writing
(a) 14
(b) 21
(c) 51
(d) 41
Answer (a) 14
18. In hire purchase , the maximum statutory charge should not exceed …….. of the installment
(a) 20%
(b) 30%
(c) 40%
(d) 50%
Answer (b) 30%
19. Hire purchase price – cash price =?
(a) Total interest
(b) Down payment
(c) Share
(d) None of the above
Answer (a) Total interest
20. Hire Purchase Debtors is also known as
(a) Stock with costumer
(b) Installments Due
(c) Both of the above
(d) None of the above
Answer (b) Installments Due
