CLFP Exam - Credit Process and Financial Statement: Test Questions with Answers Latest | Graded A+

CLFP Exam - Credit Process and Financial Statement: Test Questions with Answers Latest | Graded A+. What applicant attributes are you trying to learn about when underwriting a deal? correct answer1.) The desire to repay the debt 2.) the financial ability to make payments 3.) The reserves to withstand unexpected setbacks What are the four (4) C's of Credit? correct answer1.) Character: the desire to pay back debt 2.) Cash Flow: Ability to make payments 3.) Capital: Ability to withstand setbacks 4.) Collateral: Ability to liquidate to recover investment when the initial three (3) C's fail What are common credit criteria in the app only process? correct answer1.) TIB 2.) Industry 3.) Equipment type 4.) Bank Balances 5.) Personal Credit Reports 6.) Business Credit Reports 7.) Landlord rating 8.) Vendor quality 9.) Lease structure 10:) New/Used equipment 11.) Equipment location 12) Comp credit 13) SOS 14) References CLFP Exam - Credit Process and Financial Statement: Test Questions with Answers Latest | Graded A+ Characteristics of App Only? correct answer1.) limited upfront information (application) 2.) low-touch, high volume 3.) Credit scoring What are common credit criteria of mid ticket credit process? correct answer1.) TIB 2.) Principal's credit 3.) deal structure 4.) equipment type 5.) 2-3 years financial analysis (statements) 6.) background check 7) trade & bank references How does Entity type impact underwriting? correct answer1) different credit risks/considerations 2)different legal risks/considerations; 3) different documentation requirements Describe a Sole Proprietorship? correct answer1.) An individual who owns a business 2.) No legal requirements apart from business license 3.) Typically DBA or "doing business as" 4.) Don't file separate tax returns - 1040 Schedule C 5.) Tax Return: Income reported before owner draw/taxes 6.) Cash flow: income after tax and draw Describe a Partnership? correct answer1) Two or more people doing business documented with Partnership Agreement 2.) Separate financial & tax statement 3.) Income is generally reported prior to draw/tax 4.) Profits/Losses distributed to partner in accordance with agreeemnt What is General Partnership? correct answerPartnership with two or more people/entities each of which is legally liable for business. What is Limited Partnership? correct answerPartnership with two or more people/entities with at least one General Partner and the others Limited Partners. General Partners are liable for all company activities. Limited Partners liability is limited to their investment. What is a Joint Venture? correct answer1.) Two or more companies with common interest created for a specific project 2.) share financial statement 3.) Share profit/loss 4.) Dissolve at some date. What is a Corporation? correct answer1.) a separate legal entity in the view of other business, the law and by taxing authorities. 2.) investors buy share and own company 3.) Shareholder typically individuals 4.) Shareholders draw money via salaries/dividends 5.) Corporation files separate tax returns. What is C Corp? correct answerBasic corporaiton form. No limit to shareholders What is S Corp? correct answer1.) Sub S Corp 2.) Specific IRS guidelines taxed in the manner of a partnership 3.) Profits/losses flow to shareholders. What is Non-Profit Corporation? correct answer1.) typically formed to provide service i.e. hospital/charity etc. 2.) motives are not profit oriented; 3.) certain tax,pension and liability benefits