Hire Purchase System - MCQs

What is a hire purchase system?

• A system for cash sales

• A credit sale system

• A leasing system

• A donation system

In a hire purchase, ownership is transferred to the buyer:

• At the time of agreement

• On payment of first installment

• On payment of the last installment

• Never

Which of the following is NOT a feature of hire purchase?

• Ownership transfers immediately

• Payment in installments

• Down payment is required

• Interest is charged

Who bears the risk of loss in a hire purchase until ownership is transferred?

• Buyer

• Seller

• Government

• Insurance company

Hire purchase is governed under:

• Sale of Goods Act

• Hire Purchase Act

• Companies Act

• Banking Regulation Act

What is included in the hire purchase price?

• Only the cost price

• Only the interest

• Down payment only

• Cost price + Interest

Down payment in a hire purchase system is:

• Final installment

• First installment

• Security deposit

• Refundable fee

Which account is debited when an asset is purchased on hire purchase?

• Hire vendor A/c

• Asset A/c

• Interest A/c

• Purchase A/c

What is the nature of interest paid under hire purchase?

• Revenue expense

• Capital expense

• Deferred revenue expense

• Asset

If the buyer defaults, the seller has the right to:

• Sue for damages only

• Do nothing

• Repossess the goods

• Ignore the contract