CDCS SAMPLE TEST 02 / 25 with Answers

Test: CDCS/2                                                                       

  

1. Buyer is exposed to the following risks under Advance 

Payment Method

                 a) Country risk of seller

                 b) Seller’s bank risk

                 c) Seller credit risk

                 d) Country risk of buyer

(1)   A&D

(2)   A&C

(3)   A,C&D

(4)   A,B,C&D

2. Which of the following is a reason for adapting advance payment terms

      

a)      two companies have a long established trading relationship

b)      buyer wishes to engage the seller in a long term relationship

c)      seller is confident with the buyer’s country risk

d)     none of the above

3. Which of the following is NOT a reason for adapting open account terms

a)      Two companies have a long established trading relationship

b)      Buyer wishes to engage the seller in a long term relationship

c)       Lesser banking fees

d)      Seller is confident with the buyer’s country risk

4. An exporter based in New York has agreed to sell goods to a company in London. The importer is responsible for arranging freight and insurance. Which of the following shipping terms is correct?

1. CIF London
2. FAS London
3. CIF New York
4. FAS New York

5.What is the applicable Incoterm for an Airway Bill marked “freight prepaid”?

1. FCA
2. CFR
3. CPT             D.DAF

6. Which of the following is NOT a characteristic of DES?

a)      Contract of carriage will be between the seller and the carrier

b)      Seller is responsible for loading and unloading costs

c)      Risk of  loss / damage to the goods between port of loading and port of discharge is for seller’s account

d)     Buyer is responsible for obtaining import clearance

7. Quality export Inc enters into an agreement with Excel Exim Ltd to ship footwear from India to USA. The incoterm specified in the contract is FCA Chennai. Excel Exim Ltd has nominated reliable shipping as the carrier. Which of the following statements is FALSE?

a)      Quality Export Inc must deliver the goods to the carrier premises unloaded from the arriving means of transport

b)      If the goods are picked from reliable shipping from Quality Export Inc’s premises. Quality Export Inc is responsible for loading the goods into carrier’s means of transport

c)      Contract for carriage will be between Excel Exim Ltd and reliable shipping

d)     Risk of damage to the goods after they are delivered to reliable shipping will be for the account of Excel Exim Ltd 

8 . Y

8 . Your customer advises you that they have concluded an export sale contract with an overseas buyer. The buyer’s country is highly volatile and subject to frequent strikes by pot workers, factories, civil servants and bank staff. What is the best way for a customer to cover themselves regarding this sale

a)      Send documents on collection basis and instruct the collecting bank to release documents against payment

b)      Trade on CIF terms and arrange for an insurance cover that includes Institute Cargo Clause (A) and Institute Strike Clauses

c)      Secure payment through an irrvocable documentary credit confirmed by you.

d)     Any of the above

9. ABC Co. has entered into a contract with XYZ Ltd to ship Iron Ore from Chennai to Busan. The incoterms specified in the contract is CFR Busan. ABC Co’s mine I located 100kms. Which of the following statement correctly reflects the risks & responsibilities of ABC Co & XYZ Ltd/

a)      Risk of loss / damage to the goods after they are loaded on the trucks is for XYZ Ltd’s account

b)      Risk of loss / damage to the goods till the vessel reaches Busan is for ABC Co’s account

c)      Risk of loss / damage to the goods while they are being unloaded in Busan is for the account of XYZ Ltd

d)     ABC Co is responsible for arranging the vessel if the shipment is to be effected by charter party

  

10. Your customer has entered into a contract with an overseas buyer to ship goods on CPT basis. Shipment will be made for the customer’s welfare to port by trucks and from the port to buyer’s country by sea. Your ustomer will be using two different carriers (one for road and another for sea) to effect the shipment. Which of the following are statements is TRUE?

           a)      Your customer must pay the freight charges of first carrier only

b)      Your customer must pay the freight charges of both the carriers

c)      Risk of loss / damage during voyage is transferred to the buyer, when your customer deliveries the goods to the first carrier

d)     Risk of loss / damage during voyage is transferred to the buyer when the goods are delivered to the second carrier by the first carrier

(1)   A&C

(2)   B&C

(3)   A&D

(4)   B&D.

 11.Which of the following statements is TRUE regarding incoterms?

A.    Seller is not responsible for unloading in DEQ

B.     DAF is suitable only for overland transportation

C.     Seller should arrange for maximum possible insurance cover in CIF

D.    DDP is not suitable for transportation by sea

12.Company A (in country X) agrees to sell grade no. 2 Agrentine yellow corn to company B (in country Y) on CFR basis. Company A charters a vessel to ship goods from country X to country Z. However, before the payment is settled the companies enter into a dispute regarding the quality of corn shipped. The sales contract between the companies specifies that in case a dispute law of the country where the goods are to be delivered will apply. Which country’s law is more likely to be applied

A.    Country X

B.     Country Y

C.     Country Z

D.    Any of the above

13. Great Exporters Ltd, India enters into a contract with Food Imports S.A France to sell Basmati rice. The contract is signed under FAS terms. However, the contract does not specify any detail on who is responsible for obtaining export clearance and packing the goods. Which of the following statements is true?

A.    Great exporters ltd is responsible to obtain export clearance

B.     Great Exporters Ltd is not responsible for packing as it is not stated in the contract

C.     Food imports SA is responsible for export clearance

D.    Great Exporters Ltd is responsible for packing the goods if it is customary to   

                  do so

  

14. Match the following

      

                            a)  DEQ          -Transfer of risks at port of discharge

                            b)  DDU          -Unloading cost borne by seller

                            c)  CFR           -Import clearance by buyer

                            d)  DES           -Transfer of risk at port of loading

    

 15. Your customer has approached a manufacture to buy 1000 pairs of shoes, 

the various prices  quoted by the manufacture are as follows

          

                               EXW – 10000

                                           FOB –  10500

                                           CIF –    11500

                                           DDP –  13000

 16. Your customer has checked independently and received the following quotes for the same   shipment they are : 

All licensing and loading costs ( in exporting country ) – USD 500

Main Carriage cost – USD 1000

Minimum insurance cover – USD 500

Unloading costs, inland transport ( in importer’s country ) and import

duties –USD 1500

What quote of the exporter your customer should accept?

a)      EXW

b)      FOB

c)      CIF

d)     DDP

 16)Which of the following incoterms is correctly described?

 Incoterms             Insurance Doc.                   Transport Doc.

       DDP                     Required                            Marked Freight Paid

       CFR                     Required                            Marked Freight Collect

       FOB                     Not required                       Marked Freight paid

       FAS                      Not required                       Marked Freight Collect

 Answers:

1.      2

2.      B

3.      B

4.      D

5.      C

6.      B

7.      A

8.      C

9.      C

10.  2

11.  B

12.  A

13.  3

14.  D,A,B,C

15.  D

16.  D