If a Third Party Incurs a Secondary Liability for a Debt

question 145

Multiple Choice

If a third party incurs a secondary liability for a debt, he has given a(n)

• A) indemnity.
• B) guarantee.
• C) obligation.
• D) debt.
• E) easement.

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Definitions:

Installment Note Payable

A debt or obligation that is paid back in regular installments over a specified period, including both principal and interest payments.

Accrued Interest

Interest that has been earned but not yet paid, representing the amount owed to a lender for the use of borrowed funds or owed by a borrower.

Principal

The original sum of money borrowed in a loan, or the initial amount invested, excluding any interest or dividends.

Payment

The act of transferring money, or its equivalent, from a buyer to a seller as compensation for goods or services.