6. Commercial Policy Quiz

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1. BG stands for?

Explanation

BG stands for Bank Guarantee. A bank guarantee is a type of financial instrument provided by a bank to ensure that a specific obligation will be fulfilled by the party requesting the guarantee. It serves as a promise from the bank to cover the losses incurred if the party fails to fulfill their obligations. Bank guarantees are commonly used in business transactions to provide assurance to the receiving party that payment will be made or services will be delivered as agreed.

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About This Quiz
6.  Commercial Policy Quiz - Quiz


This quiz is designed to test the candidate's knowledge of the Commercial Policy course.

2. Who is primarily responsible for getting C Forms?

Explanation

The sales team is primarily responsible for getting C Forms. C Forms are important documents used in the process of sales tax assessment. They are issued by the sales team to customers who make interstate purchases. These forms serve as proof that the customer has purchased goods for resale and is therefore exempt from paying sales tax. The sales team is responsible for ensuring that these forms are obtained from customers and properly filed for tax assessment purposes.

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3. PDC stands for?

Explanation

PDC stands for Post-Dated Cheque. A post-dated cheque is a cheque that is written with a future date. It cannot be cashed until that date arrives. This is often done when a person wants to make a payment or give a cheque as a guarantee for a future transaction. It ensures that the recipient cannot cash the cheque before the agreed-upon date. Therefore, PDC is an abbreviation for Post-Dated Cheque.

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4. The maximum allowable credit period to be given against a PDC is

Explanation

The maximum allowable credit period to be given against a PDC is 30 days. This means that if a post-dated check is given as a form of payment, the recipient can provide a maximum of 30 days for the check to be cleared and the payment to be received. After the 30-day period, the recipient can take appropriate actions if the check has not been honored or cleared.

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5. Packing Charges are calculated on what?

Explanation

Packing charges are calculated based on the Basic Invoice Value. This means that the charges for packing materials and services are determined by the initial cost of the goods being packed, without including any additional charges or taxes. The Basic Invoice Value serves as the basis for calculating the packing charges, ensuring that they are directly proportional to the value of the goods being packed.

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6. It is the customer's responsibility to take insurance for products sent from Algypug.

Explanation

The statement is true because it states that it is the customer's responsibility to take insurance for products sent from Algypug. This means that Algypug does not automatically provide insurance for the products they send, and it is up to the customer to decide if they want to purchase insurance for their items.

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7. Which of the following will must be included in the quotation and the invoice?

Explanation

The payment terms, freight terms, and packing terms must be included in both the quotation and the invoice. The payment terms specify when and how the payment should be made, ensuring clarity and agreement between the buyer and seller. The freight terms outline who is responsible for the shipping costs and arrangements. The packing terms detail how the goods will be packaged and shipped. Including these terms in both the quotation and invoice ensures consistency and transparency in the transaction process.

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8. Type question here

Explanation

not-available-via-ai

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9. The MD is the only person who is allowed to authorise a standard discount for an account.

Explanation

The explanation for the given correct answer is that the MD (Managing Director) holds the highest authority in the company and is responsible for making important decisions. Therefore, they are the only person who has the power to authorize a standard discount for an account. Other employees may have limitations or require approval from the MD before granting any discounts.

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10. Generally, the maximum discount on our standard products is?

Explanation

The correct answer is 10%. This suggests that the maximum discount offered on the standard products is 10%. This implies that customers can avail a discount of up to 10% on the regular prices of these products.

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11. To be eligible for a 10% discount, the account must have an Annual Buying Value of approximately how much?

Explanation

To be eligible for a 10% discount, the account must have an Annual Buying Value of approximately 10 lakhs. This means that if the account's Annual Buying Value is 10 lakhs, the customer will receive a discount of 10% on their purchases.

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12. The discount structure is directly linked to the sales incentive you get:  the higher the discount, the less incentive you receive.

Explanation

The statement suggests that there is a direct relationship between the discount structure and the sales incentive. It states that as the discount increases, the sales incentive decreases. This implies that the company provides lower incentives for higher discounts, possibly to discourage excessive discounting and maintain profit margins. Therefore, the answer "True" aligns with the given explanation.

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13. If you sell a product with no discount, what is the sales incentive you are eligible to receive?

Explanation

When selling a product with no discount, the sales incentive that you are eligible to receive is 2% on contribution. This means that for every sale made, you will receive a bonus of 2% of the total contribution made by the sale. This incentivizes salespeople to maximize their efforts in selling the product and generating higher contributions, as it directly impacts their earnings.

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14. Assuming you get approximately Rs 10 lakhs of sales @ 30% contribution in a month, how much incentive would you be eligible for?

Explanation

Based on the information given, if you have approximately Rs 10 lakhs of sales with a 30% contribution, it means that you would have made a profit of Rs 3 lakhs (30% of Rs 10 lakhs). The question asks about the incentive you would be eligible for, and since the answer is Rs 6000, it suggests that the incentive is 2% of the profit made. Therefore, if you made a profit of Rs 3 lakhs, your incentive would be Rs 6000 (2% of Rs 3 lakhs).

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15. In order to get Excise exemption, the customer must issue which type of form at the time of invoicing?

Explanation

To obtain excise exemption, the customer needs to issue a CT3 or CT 3 form at the time of invoicing. This form serves as a proof that the goods being purchased are meant for further manufacturing or processing, and not for immediate consumption. By submitting this form, the customer can avail the exemption on excise duty for such goods.

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16. Under what circumstances can a customer get Excise exemption?

Explanation

Customers can receive excise exemption under three circumstances: when they are located in a Special Economic Zone, when they are selling products to a different country, and when they are in a different country. These situations allow customers to be exempt from paying excise taxes on their products.

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17. What is the current rate of Excise?

Explanation

The current rate of Excise is 12%.

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18. What is the current rate of Education Cess?

Explanation

The current rate of Education Cess is 2% on ED. This means that a 2% tax is imposed on the Education Cess for a particular item or service. The Education Cess is calculated based on the Excise Duty (ED) imposed on the item or service.

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19. What is the current VAT rate?

Explanation

The current VAT rate is 14.5%.

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20. Algypug's standard freight terms are?

Explanation

Ex-Works is the correct answer because it refers to a freight term where the seller is responsible for making the goods available at their premises, and the buyer is responsible for all other costs and risks associated with transporting the goods to their final destination. This means that Algypug's standard freight terms require the buyer to arrange and pay for the transportation of the goods from Algypug's premises to their desired location.

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21. Algypug's payment terms for standard products are?

Explanation

The payment terms for Algypug's standard products are "Against delivery." This means that customers are required to make the full payment at the time of receiving the products.

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22. Algypug's payment terms for special products are?

Explanation

The correct answer is 30% advance, balance against delivery. This means that Algypug requires customers to pay 30% of the total payment upfront as an advance, and the remaining balance is to be paid upon delivery of the special products.

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23. VAT is applicable on packing charges.

Explanation

The given statement is true because Value Added Tax (VAT) is a consumption tax that is applied to the sale of goods and services. Packing charges are considered as part of the overall cost of the goods or services being sold, therefore, VAT is applicable on them. This means that the seller must include VAT in the total price of the goods or services, including any packing charges.

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24. CST is applicable in the following circumstances?

Explanation

CST (Central Sales Tax) is a tax levied on the sale of goods in inter-state transactions in India. The correct answer states that CST is applicable when the products are sold outside Karnataka and when a 'C' Form is provided by the customer. This means that if goods are sold to customers outside the state of Karnataka, CST will be applicable. Additionally, if the customer provides a 'C' Form, which is a declaration form for claiming exemption from CST, then CST will also be applicable.

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25. It is never possible to give credit to customers.

Explanation

Credit may be given to customers with the permission of the MD, or if the customer is willing to open an LC, Bank Guarantee or provide a PDC

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26. LC stands for?

Explanation

LC stands for Letter of Credit. A Letter of Credit is a financial document issued by a bank on behalf of a buyer, guaranteeing that payment will be made to the seller upon the completion of certain conditions. It is commonly used in international trade to ensure that the seller will receive payment for goods or services provided. The bank acts as an intermediary, providing a guarantee of payment to the seller, which reduces the risk for both parties involved in the transaction.

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27. The MD is the only person who is authorised to offer open credit terms to customers.

Explanation

The statement implies that only the Managing Director (MD) has the authority to provide open credit terms to customers. This means that no other person in the company, such as other employees or managers, can offer credit terms without the MD's authorization. Therefore, the statement is true as it states that the MD is the sole authorized person for offering open credit terms to customers.

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28. Packing Charges are to be added to the quotations and invoices at what rate?

Explanation

Packing charges are added to quotations and invoices at a rate of 3%. This means that when providing a quote or issuing an invoice, an additional 3% of the total cost will be included as packing charges. This helps cover the expenses associated with packaging materials and labor involved in preparing the goods for shipment.

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29. The Shipping and Billing address must always be the same for legal reasons.

Explanation

The shipping and billing address can be different, and it is the responsibility of the sales team to ensure that this is clarified at the time of taking the order.

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30. If the customer is willing to open an LC, Algypug will bear the LC opening charges?

Explanation

If the customer opens an LC, the customer must bear all the charges for doing so.

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31. If 'C' Forms are not collected, what percentage of a sale does the company lose?

Explanation

The company will lose the difference between the CST rate and the VAT rate (ie 14.5% - 2%)

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32. The Gross Invoice Value includes?

Explanation

The Gross Invoice Value includes all the components mentioned in the answer: Basic Invoice Value, VAT/CST, Packing Charges, Freight Charges, Excise Duty + Education Cess + Cess on Secondary & Higher Education, and Insurance. These are all the different charges and taxes that are added to the basic rate of the product or service being invoiced. The Gross Invoice Value represents the total amount that the customer needs to pay, including all these charges and taxes.

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BG stands for?
Who is primarily responsible for getting C Forms?
PDC stands for?
The maximum allowable credit period to be given against a PDC is
Packing Charges are calculated on what?
It is the customer's responsibility to take insurance for products...
Which of the following will must be included in the quotation and the...
Type question here
The MD is the only person who is allowed to authorise a standard...
Generally, the maximum discount on our standard products is?
To be eligible for a 10% discount, the account must have an Annual...
The discount structure is directly linked to the sales incentive you...
If you sell a product with no discount, what is the sales incentive...
Assuming you get approximately Rs 10 lakhs of sales @ 30% contribution...
In order to get Excise exemption, the customer must issue which type...
Under what circumstances can a customer get Excise exemption?
What is the current rate of Excise?
What is the current rate of Education Cess?
What is the current VAT rate?
Algypug's standard freight terms are?
Algypug's payment terms for standard products are?
Algypug's payment terms for special products are?
VAT is applicable on packing charges.
CST is applicable in the following circumstances?
It is never possible to give credit to customers.
LC stands for?
The MD is the only person who is authorised to offer open credit terms...
Packing Charges are to be added to the quotations and invoices at what...
The Shipping and Billing address must always be the same for legal...
If the customer is willing to open an LC, Algypug will bear the LC...
If 'C' Forms are not collected, what percentage of a sale does...
The Gross Invoice Value includes?
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