Mann_BLRB 9_TB_Ch24

Business Law and the Regulation of Business

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Chapter 24—Form and Content TRUE/FALSE 1. Promissory notes serve an essential business purpose only in areas of high finance. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 2. Notes and certificates of deposit are orders to pay money. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. A signed promissory note stating “I promise to pay to Bonnie Ramcell $600 on December 15, 2008” is not covered by Article 3 of the UCC. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. A draft involves three parties: a drawer, a drawee, and a payee. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 5. Negotiability invests commercial paper with a high degree of marketability and commercial utility by allowing it to be freely transferable and enforceable by a holder in due course. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. A promissory note is an instrument that involves three parties in three capacities. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. A check is a draft payable on demand. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Handwritten words supersede typewritten words contained in commercial paper. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. The vital importance of negotiable instruments as a method of payment is frequently overstated. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 11. Only a bank may serve as the maker of a certificate of a deposit. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 12. Jake signed and delivered a promissory note payable to Nancy. Nancy negotiated the note to Fred. Fred now has the same legal status as an assignee of a contract.
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ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 13. To be negotiable, an instrument must be in writing. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. A reference in a negotiable instrument to the existence of a separate agreement to which it is subject destroys the negotiability of the instrument. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. An assignee of contractual rights acquires only the same rights as the assignor. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 16. The Revised Article 3 of the UCC provides that a check which meets all requirements of being a nego- tiable instrument, except that it is not payable to bearer or order, is nevertheless a negotiable instru- ment. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 17. A maker must sign in the lower right-hand corner of the instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 18. Negotiability is wholly a matter of form. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 19. An instrument payable at a definite time is time paper. ANS: T
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Mann_BLRB 9_TB_Ch24 - Chapter 24-Form and Content TRUE/FALSE 1 Promissory notes serve an essential business purpose only in areas of high finance

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