Miller Does the Payroll for XYZ Company

question 4

Multiple Choice

Miller does the payroll for XYZ Company.In between Adams and Bates, he inserts the name Appleton and makes out a weekly paycheck in that name.He keeps the check for himself, signing "Appleton" and cashing it at a local bank.Auditors discovered the fake payee many months later.May XYZ require the bank to recredit?

• A)No, because of the holder rule
• B)No, because Miller is an XYZ employee and the fictitious payee rule applies
• C)Yes, because the indorsement is forged
• D)Yes, because the check was, in effect, stolen

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Definitions:

Normal Balance

The typical side (debit or credit) on which an account increases, based on its classification in the accounting equation.

Account Category

A way to organize various types of accounts in accounting, such as assets, liabilities, equity, revenue, and expenses, based on their nature.

Subsidiary Ledger

A detailed ledger that contains all the transactions of a particular account, which then summarizes into a single general ledger account.

Accounts Receivable

Represents money owed to a business by its clients or customers for goods or services delivered but not yet paid for.