What Happens If a Guarantor Is Called Upon to Satisfy

question 18

Multiple Choice

What happens if a guarantor is called upon to satisfy the debtor's obligations?

• A)The contract of guarantee is modified so that the guarantor is named as the debtor.
• B)The guarantor can recover his funds from the creditor.
• C)The rights of the creditor against the debtor are exercisable by the guarantor against the debtor.
• D)The guarantee is automatically discharged.

---

Definitions:

Accrual Basis

A financial recording strategy where income and costs are documented at the point they are generated or incurred, irrespective of the timing of cash transactions.

Accounting Principles

The standardized guidelines and rules that govern financial accounting and reporting practices.

External Decision Makers

Individuals or entities outside a company, such as investors or creditors, who use the company's financial information to make decisions.

Rent Receivable

An asset account representing the amount of rent that has been earned but not yet collected by the landlord.