All of the Following Statements About a Surety Are True

question 9

Multiple Choice

All of the following statements about a surety are true EXCEPT

• A)A surety theoretically expects no losses to occur.
• B)The principal is the party who agrees to answer for the debt,default,or obligation of another party.
• C)The surety has the legal right to recover a loss payment from the defaulting principal.
• D)There are three parties to a surety bond: the principal,the surety,and the obligee.

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Definitions:

Accounts Receivable Subsidiary Ledger

A book or file that contains the individual records, in alphabetical order, of amounts owed by various credit customers.

Accounts Payable Journal

A ledger that records all short-term obligations or debts a company owes to suppliers and creditors.

Sales Journal

A specialized journal used to record all of a company's sales on credit.

Controlling Account

A general ledger account that summarizes the total balances of several subsidiary accounts, providing an overview and facilitating reconciliation.