TJ_Comp 20_TB_Ch28

TJ_Comp 20_TB_Ch28 - Chapter 28KINDS OF INSTRUMENTS,...

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Unformatted text preview: Chapter 28KINDS OF INSTRUMENTS, PARTIES, AND NEGOTIABILITY TRUE/FALSE 1. Instruments always are negotiable. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 2. Instruments are transferable, written, signed promises or orders to pay a specified sum of money. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 3. Both drafts and promissory notes may have the quality of negotiability. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. Instruments are negotiable when they contain the terms required by contract law. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. The maker is the person who writes out and creates a promissory note. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. The person on whom the order to pay a draft is made is called a drawer. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. The drawee on a check is a bank. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. Payees have rights before delivery of the instrument to them. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Once a draft is delivered to the payee, the drawee becomes liable. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 10. When a drawee has signified in writing on a draft the willingness to make a specified payment, the drawee is called the acceptor. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 11. A person who becomes an accommodation party assumes a certain degree of liability ANS: T TOP: AICPA BB-legal MSC: AACSB Analytic 12. A drawee has no responsibility until the draft is accepted. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 13. A payee is not liable on the instrument until the payee transfers the instrument. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. When a drawee agrees to make the specified payment on a draft, that person becomes the acceptor. ANS: T TOP: AICPA BB-legal MSC: AACSB Analytic 15. The guarantor is a person who promises to pay the instrument under certain circumstances. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 16. A guarantor's liability is greater than that of the original debtor. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 17. Negotiability is a characteristic of general contract law. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 18. Negotiability is a characteristic of commercial paper. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 19. If an instrument is nonnegotiable, the rights of the parties are governed by the general principles of contract law. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 20. The maker of a negotiable instrument may not sign in a trade or assumed name....
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TJ_Comp 20_TB_Ch28 - Chapter 28KINDS OF INSTRUMENTS,...

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