Liability in Which a Person Cannot Be Held Contractually Liable

question 38

Multiple Choice

Liability in which a person cannot be held contractually liable on a negotiable instrument unless his or her signature appears on the instrument is referred to as ________.

• A) warranty liability
• B) unqualified liability
• C) contract liability
• D) accommodation

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Definitions:

Indirect Method

A method for preparing the cash flow statement where net income is adjusted for non-cash transactions, deferred income, and changes in working capital to compute net cash from operating activities.

Statement Of Cash Flows

A financial report summarizing the amount of cash and cash equivalents entering and leaving a company.

Book Value

The net value of a company's assets as recorded on its balance sheet, minus its liabilities and intangible assets, such as goodwill.

Indirect Method

A cash flow statement reporting approach that adjusts net income for changes in balance sheet accounts to calculate cash from operating activities.