Morris Issued a Check to Al in Payment of a Debt

question 12

Multiple Choice

Morris issued a check to Al in payment of a debt. There were sufficient funds in Morris' account to cover the check when it was presented for payment. However, due to an error, the bank dishonored the check. Which of the following parties is/are potentially liable to the holder?

• A) the drawee bank only
• B) Morris and the drawee bank
• C) Morris only
• D) the drawee bank and any collecting bank

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Definitions:

Liquidity

The ease with which an asset, or security, can be converted into ready cash without affecting its market price.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.

Financial Ratios

Metrics derived from financial statements that are used to evaluate a company's performance and financial health.

Total Sales

The aggregate revenue a company generates from the sale of goods or services before any deductions are made.