30 CDCS sample questions with answers

Practice makes a man perfect. So let’s solve some CDCS sample questions. These CDCS practice questions are not an actual representation of questions that will be asked in the CDCS exam. However these will help you to test your understanding of the concepts learned.

For your convenience, at the top of the post, we have listed the CDCS exam practice questions. Attempt the questions and note down your answers. Then you can check the answers at the bottom of the post. Along with the answer keys we have provided detailed explanations for each question. Because it is important for you to not only get the answers right, but also to know why a particular option is correct and why the other options are incorrect.

The questions are from a wide range of topics from different chapters and are in no particular order.

Let’s drive straight in.

CDCS sample questions with answers

Table of Contents

CDCS sample question 1

Name the bank which provides an additional irrevocable undertaking to the beneficiary to honour or negotiate a complying presentation over and above the undertaking of the issuing bank.

A. Issuing Bank

B. Advising Bank

C. Confirming Bank

D. Reimbursing Bank

CDCS sample question 2

A draft is drawn 90 days after the date of shipment. The Bill of Lading is issued on 20th Feb 2022 with a shipped onboard date as 18th Feb 2022. What will be the due date for the payment?

A. 21 May 2022

B. 18 May 2022

C. 20 May 2022

D. 19 May 2022

CDCS sample question 3

A credit requires shipment of 1000 boxes of apples for about USD 10000. Partial shipment is prohibited. Which of the following shipments will be acceptable under the credit?

A. Shipment consisting of 1000 boxes of apples for USD 9000

B. Shipment consisting of 950 boxes of apples for USD 10000

C. Shipment consisting of 1000 boxes of apples for USD 11500

D. Shipment consisting of 1050 boxes of apples for USD 9500

CDCS sample question 4

Fill in the blanks below:

A reimbursing bank shall have a maximum of ­……. banking days following the day of receipt of the reimbursement claim to process the claim.

A.  1

B.  2

C.  3

D.  4

CDCS sample question 5

A credit calls for invoice in three originals. Which of the following will be acceptable?

  1. 3 original proforma invoice
  2. 3 original commercial invoice
  3. 3 original tax invoice
  4. 3 original provisional invoice

Options:

A. 1 & 2

B. 2 & 3

C. 3 & 4

D. 1 & 3

CDCS sample question 6

In a transferable credit, which of the following may be increased at the time of transferring the credit?

A. Amount of the credit

B. Latest shipment date

C. Expiry date

D. Percentage of insurance cover

CDCS sample question 7

Which one of the following bills of lading will be acceptable under an LC?

A. A bill of lading stating goods may be loaded on deck

B. A bill of lading stating goods are loaded on deck

C. A bill of lading stating goods will be loaded on deck

D. None of the above

CDCS sample question 8

An automatic non-cumulative revolving credit is issued for US$ 20,000 with the value of the credit being reinstated upon every shipment. The credit is valid for a period of one year. What is the maximum liability of the issuing bank?

A. US$ 20,000

B. US$ 240,000

C. US$ 360,000

D. Cannot be determined

CDCS sample question 9

A credit requires shipment to be effected in the beginning of March 2022. Which of the following shipment date is not acceptable?

A. 5th March 2022

B. 10th March 2022

C. 11th March 2022

D. None of the above

CDCS sample question 10

Which of the following Incoterms 2020 can be used for any mode of transport?

  1. DAP
  2. CFR
  3. FCA
  4. FAS

A. 1 & 2

B. 1 & 3

C. 2 & 3

D. 2 & 4

CDCS sample question 11

A credit is issued without specifying the time limit for presentation of documents. Within how many days beneficiary has to present the documents?

A. 7 calendar days

B. 14 calendar days

C. 21 calendar days

D. 28 calendar days

CDCS sample question 12

Which of the following is a full set of Bill of Lading?

A. 3 original Bill of Lading

B. 1 original Bill of Lading + 2 non-negotiable copies

C. 3 original Bill of Lading + 3 non-negotiable copies

D. All original Bill of Ladings issued

CDCS sample question 13

Which of the following is not considered a party to a documentary credit?

A. Applicant

B. Issuing Bank

C. Beneficiary

D. None of the above

CDCS sample question 14

Which of the following is not a responsibility of an advising bank?

A. To check the apparent authenticity of the letter of credit

B. To check that the advice accurately reflects the terms and conditions of the credit

C. To provide an undertaking to honour or negotiate

D. To inform the issuing bank without delay if it decides not to advise the letter of credit

CDCS sample question 15

Which of the following documents must be signed?

1. Invoice

2. Packing List

3. Certificate of Origin

4. Beneficiary declaration

A. 1 & 2

B.  1 & 3

C.  2 & 3

D.  3 & 4

CDCS sample question 16

A letter of credit cannot be issued by making it available with the issuing bank by:

A. Sight payment

B. Acceptance

C. Negotiation

D. Deferred payment

CDCS sample question 17

Which method of settlement offers the lowest risk to a seller in an international trade transaction?

A. Open account

B. Advance payment

C. Sight Documentary collection

D. Documentary credit

CDCS sample question 18

Fill in the blanks:

In ……. Incoterms, the beneficiary is responsible for both the export customs clearance and import customs clearance.

A. CPT

B. EXW

C. DDP

D. DPU

CDCS sample question 19

A transferable credit was issued for USD 20,000.00 and required an insurance cover of 110%. The first beneficiary transferred the credit to a second beneficiary for an amount of USD 18,000.00. What is the percentage of insurance cover that the first beneficiary should mention in the transferred credit, so that the insurance cover matches with that required in the original credit?

A. 110%

B. 120%

C. 122.22%

D. 132.22

CDCS sample question 20

A confirming bank is irrevocably bound by an amendment when

1. it advises the amendment without any comments

2. it confirms the credit

3. when it extends its confirmation to an amendment

4. it advises the amendment without confirmation

A. 1 & 2

B. 2 only

C. 3 only

D. 1 & 3

CDCS sample question 21

A letter of credit is issued without mentioning whether partial shipments are allowed or not. Which of the following is true?

A. Partial shipments are allowed

B. Partial shipments are not allowed

C. Seek clarification from issuing bank

D. None of the above

CDCS sample question 22

A second advising bank decides not to advise a letter of credit. What action is required from it?

A. It must inform the issuing bank without delay

B. It must inform the advising bank without delay

C. It may inform the advising bank without delay

D. It must inform the beneficiary

CDCS sample question 23

A credit requires shipment to be effected on or about 17th March 2022. Which of the following dates are acceptable?

A. 1 only

B. 2 & 3

C. 2, 3 & 4

D. All of the above

CDCS sample question 24

A credit cannot be amended or cancelled without the agreement of the following parties:

1. Issuing Bank

2. Applicant

3. Beneficiary

4. Confirming bank (if any)

A. 1 & 2

B. 1 & 3

C. 1, 3 & 4

D. 2 only

CDCS sample question 25

A credit requires submission of an insurance policy for 110% of invoice value. Which of the following documents are acceptable?

A. Insurance certificate

B. Insurance policy

C. Declaration under an open cover

D. All of the above

CDCS sample question 26

A credit calls for draft to be drawn at 60 days from bill of lading date. The bill of lading is dated 17th September 2021. Which of the following tenors on the draft is not acceptable?

A. 16 November 2021

B. 60 days after 17 September 2021

C. 60 days date, draft dated 17th September 2021

D. 60 days after bill of lading date

CDCS sample question 27

The term “exporting country” means which of the following?

A. the country where the beneficiary is domiciled

B. the country of origin of the goods

C. the country from which shipment or dispatch is made

D. all of the above

CDCS sample question 28

In which of the following types of credit, a draft is mandatory?

A. sight payment

B. deferred payment

C. acceptance

D. negotiation

CDCS sample question 29

Which of the following documents are not considered transport documents under UCP 600.

  1. Courier Receipt
  2. Delivery Order
  3. CMR consignment note
  4. Forwarder’s Certificate of Receipt

A. 1 & 2

B. 1 & 3

C. 2 & 3

D. 2 & 4

CDCS sample question 30

Which of the following documents must be dated?

  1. Invoice
  2. Drafts
  3. Packing list
  4. Insurance documents

A. 1 & 2

B. 1 & 3

C. 2 & 4

D. 3 & 4

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CDCS sample questions Answer Keys

1C11C21A
2D12D22B
3A13A23C
4C14C24C
5B15D25B
6D16C26D
7A17B27D
8D18C28C
9C19C29D
10B20D30C

CDCS sample questions detailed solutions

In this section we have provide detailed solutions to the CDCS practice questions and the approach to solve the questions.

Solution to CDCS sample question 1

Let’s check the options one by one.

A – Issuing bank is the bank which issues the letter of credit i.e. it issues an irrevocable undertaking in favor of the beneficiary that a complying presentation will be honoured.

B – An advising bank is the bank which advises the letter of credit at the request of the issuing bank.

C – A confirming bank is the bank which adds its confirmation to a letter of credit upon the issuing bank’s authorization or request. Adding confirmation is the same as providing an irrevocable undertaking to the beneficiary in addition to that of the issuing bank.

D – A reimbursing bank is the bank named in a letter of credit which reimburses a nominated bank which claims reimbursement after effecting honour or negotiation.

So the correct answer is option C.

Solution to CDCS sample question 2

Read the question carefully. Two concepts are tested in this question.

Firstly, from UCP 600 article 3, we come to know that when “after” is used to determine a maturity date or due date, we have to exclude the due date mentioned.

Secondly, from article 20 a (ii), we know that if the bill of lading contains an on board notation indicating the date of shipment, the date of the onboard notation will be considered as the date of shipment. This is irrespective of the bill of lading issue date. The BL issue date may be before or after the onboard shipment date.

So now in our question, the date of shipment will be the onboard date i.e. 18 Feb 2022.

The due date will be 90 days from the date of shipment. i.e. 90 days from 18 Feb 2022. While calculating the due date, we have to exclude this date.

The easiest way to calculate this is in Excel. Put the shipment date in row 1, and the number of days in row 2. Then add these two to get the sum in row 3. 90 days from 18 Feb 2022 is 19 May 2022.

X18-Feb-22
Y90
X+Y19-May-22

However, in the exam hall, you will not have the convenience of MS Excel. You will have to do it manually. Let’s see how to do it.

90 days after 18 Feb 2022 = 18 Feb 2022 + 90 days

We have to exclude 18 Feb 2022 while doing the calcualation.

There are 10 more days left in February.    [Total = 10]

There are 31 days in the month of March. [Total = 10 + 31 = 41]

There are 30 days in the month of April.    [Total= 41 + 30 = 71]

Till the end of April, 71 days are already over. Now we only need 19 more days to make it 90 days.

Total = 71 + 19 = 90

So the answer is 19 May 2022. And the correct answer is option D.

Solution to CDCS sample question 3

This question is based on UCP 600 article 30 – tolerance in credit amount, quantity and unit prices.

From 30 (b), we know that if the credit states the quantity of goods as a stipulated number of packing units or individual items, no tolerance is allowed on the quantity of goods shipped. In this question, the credit specifies the quantity as 1000 boxes of apples. Also since partial shipment is prohibited, all the goods must be shipped in one lot. So, all the 1000 boxes of apples must be shipped. At this point we can immediately rule out the answer options B and D since the quantity in both the options is not 1000 boxes.

Now we are left with options A and C. We have to choose the correct answer from these two options.

Let’s have a look at the amount. The amount is stated as about USD 10000. The key word here is “about”. Article 30 (a) states that whenever the words “about” or “approximately” are used to state the amount, quantity or unit price of goods, a tolerance of +10% and -10% is allowed in all the cases. Here the amount is about USD 10000. So the amount may vary by 10% in either direction. 10% of USD 10000 is USD 1000. The amount can vary from USD 9000 to USD 11000. Looking at the options, we can see that in option A, the amount is within this range. Option A is the correct answer.

Solution to CDCS sample question 4

This question is an easy one. It comes directly from URR 725 article 11 a (i).

“A reimbursing bank shall have a maximum of three banking days following the day of receipt of the reimbursement claim to process the claim.”

The correct answer is option C

Solution to CDCS sample question 5

From the ISBP clause on invoices – C1, we know that when a credit requires presentation of an “invoice” without further description, any type of invoice can be presented e.g. commercial invoice, customs invoice, tax invoice, final invoice, consular invoice etc. However invoice marked as “proforma” or “provisional” will not be acceptable.

So in the options provided, 1 & 4 are not acceptable.

Now in the answer options eliminate all options where either 1 or 4 are present.

We are left with option B which is the correct answer.

Solution to CDCS sample question 6

From UCP 600 article 38 on transferable credits we know that the below details may be reduced of curtailed in the transferred credit.

and, the percentage of insurance cover may be increased to match the insurance cover required in the original credit.

So the correct answer is option D.

Solution to CDCS sample question 7

To answer this question, we need to look at UCP 600 article 26 (a). It states “A transport document must not indicate that the goods are or will be loaded on deck. A clause on a transport document stating that goods may be loaded on deck is acceptable”

You need to read the words very carefully. The small words/phrases like ‘are’, ‘will be’, and ‘may be’ makes a lot of difference. The meaning of the statement in this article is that when loading on deck is mentioned on the transport document with certainty (are loaded, will be loaded), it is not acceptable. However if the transport documents mentions loading on deck as a probability (may be loaded), it is acceptable. So the correct answer is option A.

Solution to CDCS sample question 8

The revolving credit is automatic which means the revolvements happen automatically without the requirement of any amendment from the issuing bank. It is also a non-cumulative revolving credit which means any unused amount cannot be carried forward to the next period.

However the most important point is that the credit mentioned in the question is not dependent upon time. There is no time period specified within which any specific amount can be drawn. This credit is dependent upon value and is reinstated upon every shipment. So the beneficiary can ideally make a shipment every day and a fresh amount of USD 20000 will be available for drawing immediately.

Therefore, the exact liability of the issuing bank cannot be determined in this case. The correct answer is option D.

Solution to CDCS sample question 9

From UCP 600 article 3, we know that the ‘beginning’ of a month is construed as the days from 1st to 10th of the month.

The date 11th March 2022 is out of this range. So option C is the correct answer.

Solution to CDCS sample question 10

Incoterms 2020 is divided into two groups. The first group containing 7 incoterms can be used for any mode of transport. These 7 incoterms are EXW, FCA, CPT, CIP, DAP, DPU and DDP.

The second group containing 4 incoterms can be used for only sea or inland waterway transport. These 4 incoterms are

FAS, FOB, CFR and CIF.

In the choices provided, DAP and FCA are the incoterms which can be used for any mode of transport.

So the correct answer is option B (1 & 3).

Solution to CDCS sample question 11

Article 14 (c ) states that presentation of original documents is to be done not later than 21 calendar days from the date of shipment. But in any event the presentation cannot be done after the expiry date of the LC. This is the default scenario if no specific presentation period is mentioned in the letter of credit.

Always remember that the LC overrides the UCP. Even though the default presentation period is 21 calendar days, if the LC mentions this period as 14 calendar days, the beneficiary has to follow that.

To answer the question at hand, option C is the correct answer.

Solution to CDCS sample question 12

A full set of Bill of Lading consists of all the original Bill of Ladings issued by the carrier. If only 1 Bill of Lading is issued, that 1 BL comprises of a full set. If 3 BLs are issued, all the 3 BLs together comprise of a full set. And if 9 BLs are issued, then all the 9 original BLs together is called a full set.

It is a common misconception that 3 original BLs constitute a full set. It may be due to the fact that it is a regular practice to call for 3 original BLs while issuing LCs.

The correct answer to our question is option D.

Solution to CDCS sample question 13

A letter of credit is issued by the issuing bank at request of the Applicant. But still the Applicant is not a party to a documentary credit. Once the letter of credit is issued, all prior discussions between the applicant and the issuing bank is outside the scope of UCP 600. Also, no amendment can be done in the letter of credit without the consent of the beneficiary.

Thus, there are only two parties in a letter of credit – the issuing bank and the beneficiary.

The correct answer is option A.

Solution to CDCS sample question 14

The primary responsibility of an advising bank is to check the apparent authenticity of the letter of credit. It also has to ensure that it conveys the terms and conditions of the letter of credit to the beneficiary exactly in the same form as it was received from the issuing bank. (UCP 600 article 9.b) And if, for any reasons, the advising bank chooses not advise the credit, it has to inform the issuing bank of its decision without delay. (UCP 600 article 9.e)

However if an advising bank simply acts as an advising bank without adding its confirmation, it will not provide any undertaking to honour or negotiate. (UCP 600 article 9.a)

The correct answer is option C.

Solution to CDCS sample question 15

From ISBP clause A3, we come to know that when any type of certificate, certification, declaration or statement is required by a letter of credit, it is to be signed.

From ISBP clause C10, an invoice need not be signed or dated. Similarly there is no requirement for a Packing List to be signed.

In the choices provided, Certificate of Origin and Beneficiary declaration must be signed.

So the correct answer is option D (3 & 4)

Solution to CDCS sample question 16

By the rules of issuing bank (UCP 600 article 7), an issuing bank can only pay at sight (sight payment), accept a draft and pay at maturity (acceptance) or incur a deferred payment undertaking and pay at maturity (deferred payment).

An issuing bank does not negotiate. So an issuing bank cannot issue an LC that is available with itself by negotiation. The correct answer is option C.

Solution to CDCS sample question 17

From the seller’s point of view, Advance payment is the safest mode of settlement. Advance payment offers the lowest risk to a seller because in this mode of settlement, the seller will ship the goods to the buyer only after receipt of payment.

The correct answer is option B.

Solution to CDCS sample question 18

DDP is the Incoterms in which the beneficiary is responsible for both the export customs clearance and import customs clearance.

Always remember the below two points:

Incoterms EXW: Applicant is responsible for customs clearance on both export and import sides.

Incoterms DDP:  Beneficiary is responsible for customs clearance on both export and import sides.

The correct answer to this question is option C.

Solution to CDCS sample question 19

The original LC amount is USD 20,000.00

It requires an insurance cover of 110%.

110% of USD 20,000.00 = 20,000 x (110/100) = USD 22,000.00

So in the original LC we require an insurance cover of USD 22,000.00

In the transferred credit, the first beneficiary has to mention the required insurance cover percentage in such a way that it matches this amount of USD 22,000.00.

Now the amount of the transferred credit is USD 18,000.00. We need an insurance cover of USD 22,000.00 on the credit amount of USD 18,000.00

The percentage of insurance cover required = (22000 / 18000) x 100 = 122.22 %

The correct answer is option C.

Solution to CDCS sample question 20

When a confirming bank confirms a credit it is not necessary that it has to mandatorily confirm the amendments as well. It may choose not to extend its confirmation to any amendment.

In such cases, the confirming bank has two options. It may refuse to advise the amendment altogether. Or it may advise the amendment without adding its confirmation.

However if the confirming bank advises the amendment without mentioning any comments, it will be understood that it has extended its confirmation to the amendment.

The correct answer is option D. (1 & 3) Answer choice 2 is incorrect because confirming a credit doesn’t automatically transfer the confirmation to any amendments.

Solution to CDCS sample question 21

If the letter of credit is silent about partial shipment, partial shipments are allowed. This is the default provision as per UCP 600. Please refer article 31 (a)

The correct answer is option A.

Solution to CDCS sample question 22

Whenever any bank, be it the advising bank or any second advising bank is requested to              advise a credit or an amendment, it may decide not to advise the credit or the amendment. In such cases the bank concerned has to inform the bank from which it had received the credit or the amendment about its decision without delay.

An advising bank receives the credit or amendments from an issuing bank. So an advising bank has to inform the issuing bank.

A second advising bank receives the credit or amendments from the advising bank. So it has to inform the advising bank of its decision not to advise the credit or amendments.

The correct answer is option B.

Be careful while choosing the correct answer. Option C is almost the same as option B. The only difference is that this option has the word “may” instead of “must”. But this is a crucial difference which cannot be overlooked. In the given situation it is a “must” do for the advising or the second advising bank. Please refer UCP 600 article 9 (e ).

Solution to CDCS sample question 23

From UCP 600 article 3, we know that whenever the expression “on or about” is used, we have a time period of 11 calendar days. This 11 days period includes the date mentioned and five calendar days before and five calendar days after the specified date.

In this question the specified date is 17 March 2022.

We’ll write down the dates as below for a better understanding. “17” is in the middle. There are five days before “17” and five days after “17”.

12, 13, 14, 15, 16, 17,18, 19, 20, 21, 22

All of the above dates are acceptable as shipment dates.

Now looking at the answer choices, the dates 13 March 2022, 17 March 2022 and 21 March 2022 are acceptable. So the correct answer is option C.

Solution to CDCS sample question 24

From UCP 600 article 10 (a), a credit can neither be amended nor cancelled without the agreement of the issuing bank, the beneficiary and the confirming bank (if any).

The correct answer is option C.

Solution to CDCS sample question 25

When a credit requires submission of an insurance policy, there are no alternative documents which are acceptable. Insurance policy must be submitted.

However if the credit requires submission of either an insurance certificate or a declaration under an open cover, an insurance policy is acceptable. (UCP article 28.d)

The correct answer for this question is option B.

Solution to CDCS sample question 26

Whenever a draft is presented for usance credits, we should be able to calculate the maturity date from the data in the draft itself without referring to any other documents.

In this question the tenor is 60 days from the bill of lading date and BL date is 17th September 2021. 60 days from 17th September 2021 is 16th November 2021.

Now let’s look at the options.

Option A: The draft directly mentions the maturity date. This date is correct.

Option B: We can arrive at the same date from the information provided.

Option C: When a draft says “60 days date”, it means 60 days from the date of the draft. From the details provided, the draft is also dated 17 September 2021. So here also we can arrive at the same maturity date.

Option D: Here, the draft says 60 days after bill of lading date. But it doesn’t provide us any information about the bill of lading date. So we’ll not be able to determine the maturity date from the data in the draft itself. This is incorrect and not acceptable.

The correct answer is option D.

Solution to CDCS sample question 27

From ISBP article A19, the term “exporting country” should not be used as this term is not defined in UCP 600. However if this term is used in a credit, it will mean any one of the following:

The correct answer is option D – all of the above.

Solution to CDCS sample question 28

In a credit available by sight payment, drafts may or may not be required.

In a credit available by deferred payment, drafts are not required.

In a credit available by acceptance, drafts are required.

In a credit available by negotiation, drafts may or may not be required. As per definition of “negotiation”, negotiation can happen with or without drafts.

So we saw that draft is a mandatory document in only credits available by acceptance.

The correct answer is option C.

Solution to CDCS sample question 29

Courier Receipt is a transport document under UCP 600 article 25.

CMR consignment note is a road transport document which is defined under article 24.

Delivery Order and Forwarder’s Certificate of Receipt are not transport documents as defined in UCP 600 articles 19–25.

The correct answer is option D – 2 & 4

Solution to CDCS sample question 30

As per ISBP clause A11 (a), the below documents require a date even if the credit does not expressly mention this requirement:

The correct answer is option C – 2 &4

Final thoughts

We hope the CDCS sample questions in this post was useful to you. It is important to solve as many questions as possible. However it is more important to analyze the questions and the answer options. This will help you in the actual exam. After all, quality matters more than quantity.

If you liked the questions in this post, you may check our new e-book titled “300 CDCS Sample Questions with Answers and Detailed Explanations“. This comprehensive collection of 300 multiple-choice questions is tailored to assist you in your preparation for the Certified Documentary Credit Specialist (CDCS) exam. This e-book has been meticulously crafted to cover the entire CDCS syllabus, providing you with a valuable resource to enhance your understanding of the key concepts in international trade finance.

Please click here or on the blue button below to buy this e-book.

We also have another e-book called “CDCS Exam Notes for Quick Revision“. As the name suggests, this book provides short and the most important points to remember for the exam. The notes are arranged chapter wise and will be helpful for a quick revision during your preparation and also as a last minute revision just before the exam.

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5 thoughts on “30 CDCS sample questions with answers”

  1. For Question 29 – Answer is Option D – Since question ask for ‘Not Transport Document’
    For Question 23- Answer is Option is C – Since 11 march is not acceptable

    Reply

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