Ch24-TB2-WBL-10e

Ch24-TB2-WBL-10e - Chapter24 TheFunctionandCreationof...

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Chapter 24 The Function and Creation of  Negotiable Instruments 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. A promissory note that states it is payable within ninety days represents an  extension of credit by the holder to the debtor. ANSWER: T PAGE: 478 TYPE: = 2. A draft is an unconditional written order that involves three parties. ANSWER: T PAGE: 480 TYPE: = 3. A check is a draft. ANSWER: T PAGE: 481 TYPE: = 4. A cashier’s check drawn by a bank on itself is an instrument in which the  bank is both the drawer and the drawee. ANSWER: T PAGE: 481 TYPE: = 241
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242 TEST BANK 2—UNIT FIVE: NEGOTIABLE INSTRUMENTS 5. A certificate of deposit represents a loan by its owner to a bank. ANSWER: T PAGE: 483 TYPE: = 6. An instrument is nonnegotiable unless the word “negotiable” is printed on  it. ANSWER: F PAGE: 485 TYPE: = 7. To be negotiable, an instrument must be portable. ANSWER: T PAGE: 486 TYPE: = 8. A trade name or assumed name can serve as a valid signature. ANSWER: T PAGE: 486 TYPE: = 9. A thumbprint made on a document with the intent that it serve as a valid  signature will be legally valid if it is witnessed. ANSWER: T PAGE: 486 TYPE: = 10. The location of a signature on an instrument is important. ANSWER: F PAGE: 486 TYPE: = 11. A signature can consist of initials signed by a party. ANSWER: T PAGE: 486 TYPE: N 12. An acknowledgment of indebtedness is sufficient to create a negotiable in- strument. ANSWER: F PAGE: 486 TYPE: = 13. An order stating “I wish you would pay” is sufficient to create a negotiable  instrument. ANSWER: F PAGE: 486 TYPE: = 14. Making   a   note   secured   by   a   mortgage   does   not   affect   the   note’s  negotiability.
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CHAPTER 24: THE FUNCTION AND CREATION OF NEGOTIABLE INSTRUMENTS 243 ANSWER: T PAGE: 487 TYPE: N 15. To be negotiable, an instrument must be payable in money. ANSWER: T PAGE: 487 TYPE: N 16. An instrument that promises to pay “in goods” can be negotiable. ANSWER: F PAGE: 487 TYPE: =
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244 TEST BANK 2—UNIT FIVE: NEGOTIABLE INSTRUMENTS 17. A promissory note is   not  negotiable if reference must be made to foreign  exchange rates at the time payment is due. ANSWER: F PAGE: 487 TYPE: + 18. An instrument including a clause that permits the date of maturity to be  extended by the maker for “no more than a reasonable time” is negotiable. ANSWER:
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This note was uploaded on 10/15/2010 for the course ACCT ACCT40 taught by Professor Birnbaum during the Fall '08 term at CUNY Brooklyn.

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Ch24-TB2-WBL-10e - Chapter24 TheFunctionandCreationof...

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