Ch25-TB1-WBL-10e - Chapter25 Transferabilityand...

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Chapter 11 / Exercise EX11-7
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Chapter 25 Transferability and  Holder in Due Course N.B.:   TYPE  indicates that a question is new, modified, or unchanged, as  follows. N A question  new  to this edition of the Test Bank. + A question  modified  from the previous edition of the Test Bank, = A question  included  in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS 1. An instrument “payable to bearer” is transferable by assignment or by  negotiation. PAGE: 495 TYPE: N
2. A bearer instrument is negotiated by delivery alone. PAGE: 495 TYPE: N
3. An order instrument is negotiated by delivery alone. PAGE: 495 TYPE: N
4. A holder in due course (HDC) cannot acquire more rights in an instrument  than its transferor held. PAGE: 495 TYPE: =
249
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The document you are viewing contains questions related to this textbook.
Chapter 11 / Exercise EX11-7
Accounting
Reeve/Warren
Expert Verified
250 TEST BANK 1—UNIT FIVE: NEGOTIABLE INSTRUMENTS 5. The party that holds an instrument “payable to bearer” is entitled to pre- sent the instrument for payment or to transfer it to another party. PAGE: 495 TYPE: N
6. An indorsement is required to negotiate an order instrument. PAGE: 495 TYPE: =
7. A blank indorsement can consist of a mere signature. PAGE: 496 TYPE: =
8. A restrictive indorsement requires an indorsee to comply with certain in- structions regarding the funds involved. PAGE: 497 TYPE: =
9. An instrument payable to two persons jointly requires the indorsement of  only one of the payees for negotiation. PAGE: 500 TYPE: =
10. A person who receives an instrument as a gift normally possesses the rights  of an HDC. PAGE: 503 TYPE: =
11. A  promise to give value in the future is normally sufficient to confer the  rights of an HDC on one in possession of a negotiable instrument. PAGE: 503 TYPE: =
12. A holder takes an instrument for value if he or she gives a check as pay- ment for it. PAGE: 504 TYPE: =
13. Good faith, for purposes of UCC Article 3, is “honesty in fact and the ob- servance of reasonable commercial standards of fair dealing.” PAGE: 504 TYPE: =
CHAPTER 25: TRANSFERABILITY AND HOLDER IN DUE COURSE 251 14. For an ordinary holder to become an HDC, the person from whom the  holder acquired a negotiable instrument must have acted in good faith. PAGE: 504 TYPE: =
15. Acquiring a negotiable instrument after its maturity date may prevent a  holder from becoming an HDC. PAGE: 506 TYPE: N
252 TEST BANK 1—UNIT FIVE: NEGOTIABLE INSTRUMENTS 16. If a note is payable on a legal holiday, then the payment of the note will be  due on the next business day.

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