60 CDCS Sample Questions: Challenge Your Knowledge!

CDCS SAMPLE QUESTION 1

A Documentary Credit where the value of the credit gets reinstated after utilization is known as:

A. Inoperative L/C     

B. Revolving L/C

C. Red Clause L/C 

D. Green Clause L/C 

CDCS SAMPLE QUESTION 2

L/c requires shipment to be effected “On or about 25th of Dec 2008. 25th Dec 2008 is closed due to Christmas in beneficiary’s country

A. Shipment effected between 21st Dec and 30th Dec acceptable

B. Shipment effected between 20th Dec and 31st Dec acceptable

C. Shipment effected on 25th Dec is not acceptable

D. None of the above

CDCS SAMPLE QUESTION 3

If a LC calls for insurance to cover “Common Risks”, the document presented

A. Must cover all risks

B. Must cover common risks in the trade

C. Must cover risks at least as per ICC ( C )

D. Can cover any risk(s)

CDCS SAMPLE QUESTION 4

A confirming bank confirms a LC with a value of USD 120,000 and a tolerance up to 5%. This credit is amended to a value of USD 110,000. The confirming bank advices this amendment.  The maximum liability of the confirming bank at the time of advising amendment: 

A. USD 110,000           

B. USD 120,000         

C. USD 115500   

D. USD 126000

CDCS SAMPLE QUESTION 5

A credit to be made transferable, it must clearly state that it is: 

A. Assignable 

B. Divisible 

C. Transferable 

D. All of the above 

CDCS SAMPLE QUESTION 6

A confirming bank has advised an amendment but remained silent about confirmation status of that particular amendment. What can be inferred from such action of the confirming bank?

A. The amendment is confirmed

B. The amendment is not confirmed

C. Beneficiary must seek clarification from the confirming bank

D. Beneficiary must seek clarification from the applicant

CDCS SAMPLE QUESTION 7

An invoice which has been certified by the Embassy of the importing country is known as:

A. Proforma Invoice

B. Tax Invoice

C. Commercial Invoice

D. Consular Invoice

CDCS SAMPLE QUESTION 8

On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17 January XXXX the confirming bank receives an amendment cancelling the documentary credit which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks? 

A. Issuing and confirming bank – USD 0.00. 

B. Issuing and confirming bank USD 500,000.00. 

C. Issuing bank – USD 0.00 Confirming bank – USD 500,000.00. 

D. Issuing bank – USD 500,000.00 Confirming bank – USD 0.00. 

CDCS SAMPLE QUESTION 9

Which of the following documents MUST be signed? 

A. Packing list. 

B. Certificate of origin. 

C. Commercial invoice. 

D. Weight specification

CDCS SAMPLE QUESTION 10

Credit indicates the description of goods as “3,000 units of Diesel Generating Sets”. Partial shipments are prohibited. Which of the following shipments are acceptable under UCP 600? 

A. 2,850 Units 

B. 2,700 Units 

C. 3,150 Units 

D. None of them

CDCS SAMPLE QUESTION 11

An automatic non-cumulative revolving LC is issued for US$ 10,000 with the value of the LC being reinstated upon every shipment. The LC is valid for a period of one year. What is the maximum liability of the issuing bank? 

A. US$ 10,000 

B. US$ 120,000 

C. US$ 360,000 

D. Cannot be determined 

CDCS SAMPLE QUESTION 12

Which of the following is not considered as a Clean Transport Document?

A. Highly inflammable material

B. Explosive material

C. Leaky oil drums

D. All the above

CDCS SAMPLE QUESTION 13

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 by 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

CDCS SAMPLE QUESTION 14

As per ISP 98, which of the following statements is FALSE? The issuer of a standby letter of credit must: 

A. Validate the breach of any underlying transaction 

B. Need not ensure the accuracy of any documents presented 

C. Need not ensure the genuineness of any documents presented 

D. Honour presentations that appear on their face to comply 

CDCS SAMPLE QUESTION 15

A documentary credit which is available for negotiation only with a specific named bank is known as :  

A. Revolving Letter of Credit 

B. Transferable Letter of Credit 

C. Restricted Letter of Credit 

D. Green Clause Letter of Credit 

CDCS SAMPLE QUESTION 16

Credit indicates the quantity of goods as “12,000 MT’s”. Which of the following shipments are acceptable under UCP 600? 

A. Exactly 12,000 MT’s 

B. Between  10,800 to 13,2000 MT’s 

C. Between 11,400 to 12,600 MT’s 

D. All of the above are acceptable  

CDCS SAMPLE QUESTION 17

Latest date of shipment as per L/c  is : “End of Dec 2008”

A. Shipment only to be effected between 21st Dec and 31st Dec

B. Shipment only to be effected between 20th Dec and 31st Dec

C. Shipment may be effected on or before 31st Dec 2008

D. Shipment only to be effected 25th Dec to 31st Dec 2008

CDCS SAMPLE QUESTION 18

Which of the following transport document has the capacity to fulfil the three functions listed below?

– Evidence receipt of goods by carrier

– Evidence the contract of carriage

– Convey title to the goods

A.         Airway Bill

B.         Seaway Bill

C.         Truck Receipt

D.         Marine Bill of Lading

CDCS SAMPLE QUESTION 19

If a Reimbursing Bank refuses to issue its irrevocable undertaking, it must inform without delay  

A. Issuing Bank

B. Beneficiary

C. Claiming Bank

D. Issuing Bank and Claiming Bank

CDCS SAMPLE QUESTION 20

ABC Co. has entered into a contract with XYZ Ltd to ship Iron Ore from Chennai to Busan. The Incoterm specified in the contract is CFR Busan. ABC Co’s mine is located 100kms away from Chennai. 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. XYZ Ltd is responsible for arranging the vessel from Chennai to Busan

CDCS SAMPLE QUESTION 21

An issuer of a standby credit subject to ISP 98 is responsible for: 

A. Accuracy of any document 

B. Act of omission by the nominated bank 

C. Observance of law as stated in the standby 

D. Performance of any underlying transaction

CDCS SAMPLE QUESTION 22

Applicant of the credit requires to include copy of proforma invoice as an integral part of the credit

A. Issuing may include the same as required without any hesitation

B. Issuing should discourage applicant but may include if applicant insist for the same

C. Issuing bank should refuse to include proforma invoice as an integral part of the credit

D. Issuing bank may disregard such instruction

CDCS SAMPLE QUESTION 23

Which Documentary credit allows the beneficiary to obtain a packing credit without impacting his credit facilities     

A. Red Clause LC 

B. Advance Payment Guarantee 

C. LC allowing pre-shipment credit by the nominated bank 

D. Advance Payment Standby LC. 

CDCS SAMPLE QUESTION 24

Extract from a LC:

Beneficiary: ABC Co, Taiwan

Documents required: 

1.  Certificate of Origin issued by the manufacturer

2.   Inspection Certificate issued by a competent authority in the exporting country

The beneficiary presented the following documents:

I. Certificate of origin issued by a Chamber of Commerce mentioning the name of the manufacturer

II.  Inspection Certificate issued by XYZ Co in China

III. Invoice showing manufacturer as XYZ Co, China

A. Documents I and II are not acceptable

B. Documents I and II are acceptable

C. Document I is acceptable but II is not

D. Document II is acceptable but I is not

CDCS SAMPLE QUESTION 25

To cancel a reimbursement authorization for an unexpired LC, the Issuing Bank has to send an authenticated transmission to: 

A. Nominated Bank 

B. Advising Bank in a freely negotiable Credit 

C. Reimbursing Bank 

D. All of the above

CDCS SAMPLE QUESTION 26

Your customer has entered into a contract with an overseas buyer to ship goods on CPT basis. Shipment will be made from the customer’s warehouse to port by trucks and from the port to buyer’s country by sea. Which of the following statements are TRUE?

A. Your customer must pay the freight charges for truck only

B. Your customer must pay the freight charges of both road and sea journey 

C. Risk of loss / damage during journey is transferred to the buyer, when your customer deliveries the goods to the carrier at warehouse

D. Risk of loss / damage during journey is transferred to the buyer when the goods are delivered on board the ship  

1. A&C     
2. B&C     
3. A&D     
4. B&D

CDCS SAMPLE QUESTION 27

You have issued a standby in English subject to ISP 98 calling for the following documents • Statement of default 

•   Inspection Certificate issued by SGS 

Which of the following presentations are ACCEPTABLE? 

l. Statement of default issued in English and Inspection Certificate issued by SGS in English 

II. Statement of default issued in Spanish and Inspection Certificate issued by SGS in Spanish 

III. Statement of default issued in English and Inspection Certificate issued by SGS in Spanish 

IV. Statement of default issued in Spanish and Inspection Certificate issued by SGS in English

A. I only 

B. I and III 

C. I, III and IV 

D. I, II, III and IV 

CDCS SAMPLE QUESTION 28

Extract from a credit:

LC Value: USD 10,000 / Quantity: 100 Kgs / Partial Shipments: Not Allowed

Which of the following presentations are ACCEPTABLE?

A. Invoice showing shipment of 100 Kgs for USD 9,000

B. Invoice showing shipment of 100 Kgs for USD 9,800

C. Invoice showing shipment of 90 Kgs for USD 9,500

D. Invoice showing shipment of 105 Kgs for USD 10,500

CDCS SAMPLE QUESTION 29

Where non-payment of a reimbursement claim is due to early submission , the Reimbursing Bank must inform? 

A. Issuing Bank 

B. Claiming Bank 

C. Issuing and Claiming Bank

D. Beneficiary

CDCS SAMPLE QUESTION 30

Company A (in country X) agrees to sell Agrentine yellow corn to company B (in country Y) on CFR Incoterms 2020 basis to a port in country Z. 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 of  dispute law of the country where the goods are to be delivered will apply. Which country’s law is more likely to be applied

1. Country X     
2. Country Y     
3. Country Z     
4. Any of the above

CDCS SAMPLE QUESTION 31

Under a standby subject to ISP 98 requiring a statement of default, which of the following is mandatory requirement in the document? 

I. A representation to the effect that payment is due because a drawing event as described in the standby has occurred 

II. Issue date 

III. Beneficiary’s signature 

IV. Witness signature by the applicant

A. I only 

B. l and II 

C. I, II and III

D. I, II, III and IV 

CDCS SAMPLE QUESTION 32

If a credit issued by MT999 and without stating “full details to follow”, do you regard the transmission as the operative instrument’? 

A. Credit is sent via SWIFT medium, hence it is an operative instrument 

B. Credit does not state “full details to follow”, hence it is an operative instrument 

C. Both A & B are true 

D. Credit is not an Operative instrument 

CDCS SAMPLE QUESTION 33

A LC which is available for presentation of shipping documents only after the Issuing bank has received a performance guarantee by the beneficiary’s bankers is known as: 

A. Standby LC 

B. Conditional Documentary Credit 

C. Counter Standby 

D. Inoperative LC 

CDCS SAMPLE QUESTION 34

A B/L presented under a LC shows the on board date as 16 January and issue date as 18 January. If the credit also requires a presentation of insurance certificate covering all risks, which of the following presentations will NOT be acceptable?

I. An insurance certificate issued on 18 January covering risks as per ICC (A)

II. An insurance policy issued on 16 January covering risks as per ICC B

III. An insurance policy issued on 19 January showing cover is effective from 15 January covering all risks excluding war risks

IV. An insurance policy issued on 15 January evidencing it expires on 31 December

A. I, II and III

B. II, III and IV

C. I, III and IV

D. I, II and IV

CDCS SAMPLE QUESTION 35

A bank which has issued a reimbursement undertaking received a claim that complied with the terms and conditions of the undertaking. Before they could honour the claim, the issuing bank gave instructions that the claim should not be honoured as they suspected that shipment was not as per LC terms. 

What is the best course of action for the reimbursing bank as per URR 725? 

A. Request claiming bank to cancel the claim 

B. Instruct claiming bank to contact the beneficiary 

C. Honour the claim and debit the issuing bank’s account 

D. Dishonor the claim as per the issuing bank’s instruction 

CDCS SAMPLE QUESTION 36

Great Exporters Ltd, India enters into a contract with Food Imports S.A France to sell Basmati rice. The contract is signed under FAS Incoterms 2020. 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

1. A only     
2. A&B     
3. A&D     
4. B&C

CDCS SAMPLE QUESTION 37

Under a standby subject to ISP 98 calling for court order, which of the following MUST be evident in the court order? 

I.   Document must be signed by a court’s official 

II.  Document must have beneficiary’s signature 

III. Document must bear a suitable title 

IV. Document must be dated

A. I, II and III 

B. I, III and IV 

C. I, II, III and IV 

D. None of the above 

CDCS SAMPLE QUESTION 38

A beneficiary receives an irrevocable documentary credit for which USD 22,500 may be drawn during each month of the documentary credit’s one year validity. The documentary credit also indicates that reinstatement is on a cumulative basis. Full monthly drawings were made during the first, second, fourth, fifth and seventh months and there have been no other drawings. In the last month of the documentary credit’s validity, the beneficiary expects to make a final shipment. What is the maximum value available for this final drawing?

A. USD 112,500

B. USD 135,000

C. USD 157,500

D. USD 180,000

CDCS SAMPLE QUESTION 39

Discrepant documents were presented under a credit. Issuing bank sent notice of refusal to presenting bank and advised discrepancies to the applicant. Applicant waived discrepancies and advised issuing bank to honor. The issuing bank is: 

A. Bound to accept the documents & honor

B. May still reject the documents & refuse to honor

C. Must return the documents to the presenter 

D. None of the above 

CDCS SAMPLE QUESTION 40

Under AML regulations, which red flag might indicate potential trade-based money laundering (TBML) in a letter of credit transaction?

A. The credit is issued in a freely convertible currency.

B. The goods being traded are inconsistent with the beneficiary’s business profile.

C. The issuing bank and advising bank are in the same jurisdiction.

D. The transaction includes transport documents issued by a reputable carrier.

CDCS SAMPLE QUESTION 41

Which of the following statements is TRUE regarding reimbursement claims?

A. An issuing bank is not responsible for delay in payment by the reimbursing bank, which has issued a reimbursement undertaking

B. A reimbursing bank is required to check if duplicate claims are made by the claiming bank

C. In a freely negotiable credit, it is not possible to debit the account of the issuing bank

D. A reimbursing bank is not authorised to disregard claims received 10 banking days prior to the value date

CDCS SAMPLE QUESTION 42

If an exporter is willing to release the shipping documents directly to the buyer, but wishes to retain some guarantee of payment should the buyer fail to pay on the due date, which of the following documentary credits BEST suits the exporter’s needs?

A. Transferable

B. Revolving

C. Standby

D. Revocable

CDCS SAMPLE QUESTION 43

If the advising bank is unable to validate the apparent authenticity of the credit, it must:

A. Inform the issuing bank & not advice the credit to the beneficiary 

B. Inform the beneficiary & not inform the issuing bank 

C. Inform the issuing bank and simultaneously may advise the unauthenticated credit to the beneficiary informing  its inability to authenticate the credit 

D. Any of the above is acceptable 

CDCS SAMPLE QUESTION 44

Extract from a standby issued subject to ISP 98 

• Beneficiary: XYZ Ltd 

• Documents required: 1. Statement of default   2. Arbitration Award 

Which of the following presentations will NOT be acceptable?

l.   Statement of default issued by XYZ Ltd and Arbitration Award issued by Arbitration Tribunal 

II.  Statement of default issued by XYZ Ltd and Arbitration Award issued by XYZ Ltd 

III. Statement of default issued by Arbitration Tribunal and Arbitration Award issued by Arbitration Tribunal 

IV. Statement of default issued by Notary Public and Arbitration Award issued by Arbitration Tribunal

A. III only 

B. III and IV 

C. II and III 

D. II, III and IV 

CDCS SAMPLE QUESTION 45

A LC is issued for about USD 300,000 prohibiting partial shipment. Which of these drawings is discrepant?

A. USD 285,000

B. USD 290,000

C. USD 315,000

D. None of the above

CDCS SAMPLE QUESTION 46

Credit indicates that the reimbursing bank charges are for the account of the beneficiary. No reimbursement claim was presented to the reimbursing bank under the credit and the reimbursing bank was unable to collect the charges from the beneficiary. Under these circumstances, the reimbursing bank could claim its charges from: 

A. Claiming Bank 

B. Advising Bank 

C. Issuing Bank 

D. Reimbursing Bank 

CDCS SAMPLE QUESTION 47

Extract from a standby issued by you subject to ISP 98: 

Documents should be presented to Ms. Sheila Kaul, Floor No. 6, Centralized Operations, ABC Bank, 123 Fantasy Road, New Delhi

Which of the following discrepancies may be waived by the issuer? 

l.   Documents presented to Ms. Sonia Sharma, Floor No. 6, Centralized Operations, ABC Bank, 123 Fantasy Road, New Delhi 

II.  Documents presented to Mr. Amit Moore, Floor No. 8, Centralized Operations, ABC Bank, 123 Fantasy Road, New Delhi 

III. Documents presented to Ms. Neena Moss, Floor No. 7, Standby Operations, ABC Bank, 177 Dream Road, Chennai 

IV. Documents presented to Ms. Gita Kumar, Floor No. 2, Standby Operations, ABC Bank, 177 Image Drive, Colombo

A. I only 

B. I and II 

C. I, II and III 

D. I, II, III and IV 

CDCS SAMPLE QUESTION 48

On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17 January XXXX the confirming bank receives an amendment cancelling the documentary credit which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?

A. Issuing and confirming bank – USD 0.00.

B. Issuing and confirming bank USD 500,000.00.

C. Issuing bank – USD 0.00 Confirming bank – USD 500,000.00.

D. Issuing bank – USD 500,000.00 Confirming bank – USD 0.00.

CDCS SAMPLE QUESTION 49

Extract from an invoice: 

1,000 pairs of shoes as per PO No. 123, GBP 60,000

Less 10 % already paid GBP 6,000

Total Invoice Value GBP 54,000

If the credit requires an insurance certificate, 

which of the following presentations is ACCEPTABLE?

A. An insurance certificate for GBP 110,000 covering shipment of shoes and sandals and socks 

B. An insurance certificate for GBP 59,400 covering shipment of shoes 

C. An insurance policy for GBP 66,000 covering shipment of goods as per PO No. 123 

D. All of the above are acceptable 

CDCS SAMPLE QUESTION 50

Which of the following correctly represents the three main stages of money laundering?

A. Placement, Integration, Layering
B. Placement, Structuring, Integration
C. Placement, Layering, Integration
D. Structuring, Layering, Placement

CDCS SAMPLE QUESTION 51

In revolving credits where reinstatement is dependent on value, which of the following controls of operations risk are required?

A. Restrict negotiation to a nominated bank

B. Restrict the overall drawing value

C. Restrict the individual shipment/drawing value

D. All of the above

CDCS SAMPLE QUESTION 52

Extract from a LC: 

• Amount: Approx US$ 60,000 

• Tenor: 20 days from B/L date 

• Drawee: Issuing Bank 

• Presentation Period: 15 days 

Documents were presented on 15 February XXXX which showed the following:

• Invoice amount: US$ 65,000 

• B/L onboard date: 01 February XXXX 

Which of the following bills of exchange is drawn CORRECTLY for the above transaction?

l.   Maturity date: 20 February XXXX, Draft amount: US$ 60,000 

II.  Tenor: 20 days from the date of shipment, Draft amount: US$ 65,000 

III. Tenor: 20 days from 01 February XXXX, Draft amount US$ 65,000 

IV. Tenor: 20 days from B/L date 01 February XXXX, Draft amount US$ 65,000

A. I and II 

B. I and III 

C. II and IV 

D. III and IV 

CDCS SAMPLE QUESTION 53

A cumulative revolving documentary credit is opened with six months’ validity and allowing for USD 25,000.00 to be drawn each month. If only the first month’s shipment is effected in full, what is the available amount in the fourth month?

A. USD 0.00.

B. USD 25,000.00.

C. USD 75,000.00.

D. USD 100,000.00

CDCS SAMPLE QUESTION 54

What is the difference between a marine bill of lading and a non-negotiable seaway bill (NN SWB)? 

A. Marine B/L covers sea shipment while NN SWB covers all modes of transport 

B. Marine B/L is a document of title to goods, while NNSWB is not a document of title to goods 

C. Marine B/L may be signed by master or carrier, while a NN SWB can be signed only by a carrier 

D. Original marine B/L will be issued by the shipping companies while only copies of NN SWB will be issued by shipping companies 

CDCS SAMPLE QUESTION 55

A credit which states that “payment under the credit will be made only after the goods have been cleared through customs is a 

A. Credit with non-documentary conditions 

B. Inoperative credit 

C. Commercial credit 

D. Clean credit

CDCS SAMPLE QUESTION 56

What is the primary role of banks in combating money laundering in trade finance?

A. To ensure that all shipments are inspected before release.

B. To report suspicious activities to the appropriate regulatory authorities.

C. To verify the legal ownership of goods in all transactions.

D. To monitor exchange rate fluctuations in international transactions.

CDCS SAMPLE QUESTION 57

Your client ships a consignment of bulk chemicals to a pharmaceutical company once a month and the importer wants to pay through the medium of a documentary credit. The consignment is always for the same product and is approximately the same value. What type of LC would be most suitable and cost effective? 

A. Revolving 

B. Evergreen 

C. Transferable 

D. Red clause

CDCS SAMPLE QUESTION 58

Which of the following is NOT considered as a transport document under UCP 600? 

A. Charter Party Bill of Lading 

B. Claused Bill of Lading 

C. House Airway Bill 

D. Forwarder’s Cargo Receipt 

CDCS SAMPLE QUESTION 59

Your client “Frequent Trading” has been trading successfully with a particular buyer for the last two years. The buyer has a good financial record. Frequent Trading is unhappy about using “documentary credit” as the payment method due to higher costs and operational issues? Is there another way in which their risks can be covered? 

A. Use Red Clause LC 

B. Use Standby Credits 

C. Revolving LCs 

D. Instalment Credits 

CDCS SAMPLE QUESTION 60

Documents under a LC which requires presentation of an air waybill consigned to the issuing bank have been delayed in transit. In order for the applicant to take delivery of the goods immediately, which of the following documents should an issuing bank provide to the applicant? 

A. Delivery Order 

B. Letter of Indemnity 

C. Shipping Guarantee 

D. None of the above

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