Hire Purchase

The ownership of goods under hire purchase agreement belongs to the _____________

• seller

• purchaser

• seller and purchaser

• purchaser and financial institution

Which two of the following descriptions regarding hire purchase are true?

I. Interest is charged by seller on cash price

II. Hire Purchase Price = Cash Price + Total Interest

III. Once the deposit is paid, the ownership of goods is held by the buyer

IV. Instalment = (Amount To Be Financed + Total Interest) / Total Number Of Instalments

• I,II

• I,III

• II,IV

• III,IV

Which two of the following descriptions regarding hire purchase are true?

I. Interest is charged by seller on cash price

II. Hire Purchase Price = Cash Price + Total Interest

III. Once the deposit is paid, the ownership of goods is held by the buyer

IV. Instalment = (Amount To Be Financed + Total Interest) / Total Number Of Instalments

• I,II

• I,III

• II,IV

• III,IV

What is a hire purchase agreement or contract?

• A hire purchase agreement is an agreemnet between a hire person and an average person

• A hire purchase agreement is an agreement between an owner and a hirer

• A hire purchase agreement is an agreement between two people who are friends

Down payment is the payment made

• At the time of paying the first instalment

• At the time of signing the agreement

• At the time of paying the second instalment

• At the time of paying the last instalment

The amount of interest is credited by the buyer to

• Interest Account

• Vendor Account

• Asset Account

• Depreciation Account

When the hire purchaser makes default in paying the instalment the hire vendor has

• The right to take repossession of the asset

• No right to take repossession

• The option to reposses the assets

• He has to approach the court

When the hire purchaser makes default in paying the instalment the hire vendor has

• The right to take repossession of the asset

• No right to take repossession

• The option to reposses the assets

• He has to approach the court

Under hire purchase system the initial payment is known as

• First instalment

• Down payment

• Purchase price

• Hire charges

In the books of hire vendor the depreciation is charged

• True

• False