Faro Is an Agent Authorized to Sign Negotiable Instruments on Behalf

question 57

Multiple Choice

Faro is an agent authorized to sign negotiable instruments on behalf of Global Supply Inc. To protect against potential liability on a note signed on the corporation's behalf, Faro should

• A)not identify Global Supply nor indicate his agency status.
• B)sign "Faro, Global Supply Inc.," but not indicate his agency status.
• C)indicate his agency status, but not identify Global Supply.
• D)identify Global Supply and indicate his agency status.

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Definitions:

Sales Returns

Goods returned by customers to the seller for a refund or credit, often due to defects or dissatisfaction.

Allowances

Amounts deducted from gross revenue or expenses, accounting for items like returns, damaged goods, or discounts.

Operating Cycles

The period it takes for a company to purchase inventory, sell it, and convert the sale into cash.

Financial Statements

Reports that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.