Which of the Following Statements Is TRUE with Respect to Promissory

question 36

Multiple Choice

Which of the following statements is TRUE with respect to promissory notes?

• A) A promissory note usually requires the payment of interest, but it need not do so.
• B) The subject matter of a promissory note can be either the payment of money or the performance of services.
• C) Unlike a cheque or a bill of exchange, a promissory note is effective even without consideration because it consists of a promise to pay money.
• D) A promissory note always involves three different parties, called the maker, the payee, and the payer.
• E) A promissory note must be payable in instalments.

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Definitions:

Direct Labor

The wages or salaries paid to employees who are directly involved in the production of goods or services.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the expenses to convert raw materials into finished goods.

Factory Overhead Costs

Expenses related to the operation of a factory that are not directly linked to a specific product, such as maintenance, utilities, and salaries of supervisory staff.

Direct Material

The raw materials that are used directly in manufacturing a product and can be easily traced to the final product.