Free Practice Questions for NICA CCCA

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Sample NICA CCCA Practice Questions

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1What is the primary objective of a corporate credit policy in a Nigerian commercial enterprise?

A.To maximize sales volume at all costs without regard to cash flow

B.To completely eliminate bad debts by refusing credit to all customers

C.To optimize profitability by balancing sales growth with acceptable credit risk

D.To shift all credit collection activities to third-party debt recovery agencies

Explanation: A corporate credit policy is designed to optimize profitability. It acts as a framework to balance sales growth (which is promoted by extending credit) with the risk of bad debt. Completely avoiding credit limits sales, while uncontrolled credit leads to cash flow crises. The policy defines criteria for creditworthiness to achieve this balance.

2Which stage of the credit cycle involves gathering information, checking bank references, and conducting credit bureau searches before extending a credit facility?

A.Credit evaluation and assessment

B.Debt collection and recovery

C.Security documentation and perfection

D.Credit monitoring and supervision

Explanation: The evaluation and assessment stage occurs before any credit is extended. During this stage, credit administrators gather customer information, pull credit bureau reports, check references (trade and bank), and analyze financial statements to determine creditworthiness and recommend a credit limit.

3Which document issued by a credit provider in Nigeria formally conveys the approval of a credit limit, detailing the terms, repayment period, interest rate, and required security?

A.Credit Application Form

B.Facility Letter / Offer Letter

C.CAC Form 1.1

D.Board Resolution to Borrow

Explanation: A Facility Letter (or Offer Letter) is the official contract sent by the lender to the borrower. It details the approved credit limit, interest rate, tenor, conditions precedent, covenants, and collateral requirements. Once signed by the borrower, it becomes a legally binding credit agreement.

4In corporate credit administration, what does the term 'credit terms' typically specify?

A.The legal penalties for corporate insolvency under Nigerian CAMA law

B.The list of directors authorized to sign the credit application

C.The period allowed for payment and any discount offered for early settlement

D.The minimum value of movable property to be registered on the National Collateral Registry

Explanation: Credit terms specify the credit period (e.g., net 30 days) and any cash discount offered for early payment (e.g., 2% if paid within 10 days, written as '2/10 net 30'). It outlines the timeline and conditions for customer payment.

5If a Nigerian supplier offers credit terms of '3/15, net 45', what is the meaning of these terms?

A.A 3% discount is granted if payment is made within 15 days; otherwise, the full invoice amount is due within 45 days

B.Interest will accumulate at 3% for the first 15 days, and then rise to 45% if unpaid

C.The customer must pay 3% of the invoice immediately, 15% in a week, and the net amount in 45 days

D.The credit limit is capped at 3 million Naira for 15 days, and net limits apply up to 45 days

Explanation: In standard credit notation, '3/15, net 45' means the customer is allowed a 3% cash discount off the invoice price if payment is settled within 15 days. If they do not take the discount, the full (net) balance is due within 45 days from the invoice date.

6Which of the following is considered a primary document for verifying a corporate borrower's registration status in Nigeria?

A.Tax Clearance Certificate

B.Certificate of Incorporation issued by the CAC

C.National Identity Card of the Managing Director

D.Utility Bill in the name of the company

Explanation: In Nigeria, the Certificate of Incorporation issued by the Corporate Affairs Commission (CAC) is the primary legal proof that a corporate entity has been duly registered and exists as a separate legal personality. It is crucial for credit verification.

7What is a 'credit line' (or credit limit) under corporate credit administration?

A.The physical boundary at a bank where cash collections are processed

B.The maximum amount of credit exposure a credit provider is willing to extend to a buyer at any given time

C.The legal agreement that requires a borrower to purchase credit insurance

D.The interest rate margin charged above the CBN Monetary Policy Rate (MPR)

Explanation: A credit line or credit limit represents the maximum outstanding balance of credit extended to a specific customer that a business is willing to tolerate. It acts as a risk control measure to prevent over-exposure to any single debtor.

8Which security type involves the actual physical transfer of possession of a movable asset from the debtor to the credit administrator until the debt is paid?

A.Mortgage

B.Pledge

C.Hypothecation

D.Floating Charge

Explanation: A pledge is a form of security interest in which the borrower (pledgor) delivers physical possession of personal property or documents of title to the creditor (pledgee) as security for the debt. The creditor holds the asset until the loan is fully repaid.

9What is the function of a 'condition precedent' in a Nigerian credit facility agreement?

A.A condition that must be fulfilled by the borrower before the lender is obligated to disburse the credit

B.A penalty clause applied when a borrower defaults on their first payment

C.A request by the borrower to lower the interest rate during the loan tenure

D.An option for the lender to cancel the credit line without any prior notice

Explanation: Conditions Precedent (CPs) are requirements or events that must be satisfied or occur before the credit provider has a legal obligation to disburse funds. Examples include providing satisfactory legal opinions, registering collateral, or providing signed board resolutions.

10Which type of credit limit is automatically adjusted and renewed dynamically based on the borrower's payment history and outstanding balance without requiring a new contract?

A.Single-transaction credit limit

B.Revolving credit limit

C.Term credit limit

D.Non-accrual credit limit

Explanation: A revolving credit limit allows the borrower to repeatedly draw down, repay, and draw down again up to the maximum limit. As payments are made, the available credit line is restored automatically, making it highly efficient for ongoing trade credit.

About the NICA CCCA Exam

This practice exam covers credit administration foundations, credit risk analysis, debt recovery, credit laws in Nigeria, and ethical standards of credit practice.

Exam sponsor: National Institute of Credit Administration (NICA). The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

100 multiple-choice questions

Time Limit

3 hours

Passing Score

60%

Exam / Certification Fees

Free

Exam sponsor website

Reported exam pass rate: ~75%. estimated pass rate This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Official sources

Official NICA Website

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

20%

Credit Administration Foundations

Principles of credit, credit cycle steps, and loan administration processes.

20%

Credit Risk Analysis & Assessment

Evaluating financial statements, cash flows, qualitative credit scores, and collateral.

20%

Debt Recovery & Receivables Management

Aging analysis, collection methods, workout plans, and bad debt management.

20%

Credit Laws & Regulations in Nigeria

AMCON Act, CBN micro-finance policies, credit registry laws, and contract provisions.

20%

Ethical Standards of Credit Practice

Professional ethics in credit administration, anti-money laundering compliance, and confidentiality.

Preparing for the NICA CCCA Exam

What You Need to Know

Passing score: 60%
Assessment: 100 multiple-choice questions
Time limit: 3 hours
Exam / certification fees: Free Official sources

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Frequently Asked Questions

What is the format of the NICA CCCA exam?

The exam consists of 100 multiple-choice questions covering all five content domains.

What is the passing score for the NICA CCCA exam?

Candidates must score at least 60% to pass the exam.