1. What is an example of nature of credit?

One example of nature of credit is a term loan, it is a type of credit that provides a fixed amount of
funds that must be repaid over a set period of time, with interest. Term loans are commonly used by
businesses to finance capital expenditures or other long-term investments.

2. What are the nature & characteristics of credit?

The nature of credit is it has the ability to obtain a thing of value, either in a cash or merchandise
form of credit, and in exchange a promise to pay a definite sum of money on demand or future
determinable time. It’s a transaction between a creditor and a debtor, wherein the latter makes a
promise that he’ll pay the creditor, but for it to be valid, it should be in a form of writing where
knowledge and consent are performed both of the creditor and debtor, the promise should also
specify the principal amount, interest, and the maturity date. The contract must specify the definite
sum of money to ensure that this was the amount that was borrowed and the maturity date to when
will the creditor will start demanding for the payment.

The characteristics of credit is it’s a two-way contract. The debtor and creditor are the two parties
wherein the latter is the source of credit and the one who extends the loan, and the debtor is the
other party requesting for the loan. This contract becomes valid when it’s in a form of writing and
the principal amount, interest, and the maturity date are all acknowledged and consented by both
parties. Another characteristic of credit is it is elastic, it can be increased or decreased by the
creditor as long as the debtor has the capacity and appraised value of his collateral. There is also the
presence of trust or faith in credit, there won’t be a credit if the creditor does not trust his debtor
that he has the ability and willingness to pay his debt. Lastly, it involves futurity, like a deadline for a
payment. As the creditor vest his faith to the debtor, he also trust that the debtor will be able to
fulfill his obligation to the settled maturity date of payment.

3. What is the nature of credit purchase?

Credit purchase is to purchase something that you receive today, usually termed as “on credit” and
that you will pay it in the future or later.

4. What is the nature of debit & credit?

The nature of debit and credit can be explained in  the context of accounting and bookkeeping. Debit
refers to an entry made on the left side of an account in accounting. It is made to record an increase
in assets, expenses, or dividends paid, and a decrease in liabilities, equity, or revenue. In Credit,
refers to an entry made on the right side of an account in accounting. It is made to record an
increase in liabilities, equity, or revenue, and a decrease in assets, expenses, or dividends paid.

The two terms can also be defined as, Debit refer to the amount that is owed to a financial
institution or creditor. For example, you have a debit card, if you want to purchase an item you can
use it to pay for the item which in turn deduct or reduce the balance from your bank account. In
Credit, refers to borrowing or lending of money. For example a Loan, the lender or creditor provides
funds to a borrower or debtor with the expectation that the borrower will repay the funds over
time, typically with interest.

5. What accounts have a credit nature?

Accounts that have a credit nature are those that record increases in liabilities, equity, and revenue,
or decreases in assets and expenses. An example of this are Liabilities, Equity, Revenue, Contra-asset
accounts, and Gains.

6. What are the 5 foundations of credit?

The first foundation of credit is Confidence, the creditor must trust the debtor’s capacity to pay.
Second is, Proper facilities, legal facilities like the credit information and document must exist to
make the agreement valid. Third is, Stability of Monetary standard, the purchasing power is
considered when extending credit. Fourth is, Government assistance, regulation that protects both
parties should be considered for credit transaction. Lastly, Credit Risk, it shall be borne by the
creditors that the debtor has the possibility   to not fulfill his promise to pay.

7. What are the 4 main types of credit?

According to an article of Christian Credit Counselors(2014) the 4 main types or forms of credit are
Revolving Credit, Charge Cards, Installment Credit, and Non-installment or Service Credit.

8. What are the 3 fundamentals of credit?

The three fundamentals of credit are Creditworthiness, Collateral and Capacity. Creditworthiness
refers to the ability of the debtor to pay his loan or debt. Collateral is a form of security that a debtor
provides to the creditor for his debt. Capacity refers to the ability of the debtor to make a debt and
pay on time.

9. What are the 4 C’s of credit?

There are actually 5 C’s of Credit and these are Character, Capacity, Capital, Collateral and
Conditions.

Character refers to the debtor’s personality, his mental and moral attitude determining his credit
rating.

Capacity refers to the debtor’s willingness and capacity to pay.

Capital refers to the debtor’s real and personal property that can serve as his liquid asset for non-
payment.
Collateral refers to a something of value, the debtor’s assets can be of pledge for security in the part
of the creditor.

Conditions include local business conditions or economic conditions during time of loan application.

10. What is the basic concept of credit?

Credit is the ability to borrow money from the creditor with the promise that the debtor will pay it in
the future, and often with an interest.