When the Primary Party Refuses to Pay an Instrument According

question 9

Multiple Choice

When the primary party refuses to pay an instrument according to its terms, said party is required to give:

• A) notice of nonpayment.
• B) notice of dishonor.
• C) notice of denial.
• D) secondary party notice.

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Definitions:

Accounts Receivable

Outstanding payments due to a company from its customers for delivered or utilized goods and services.

Bad Debt Expense

An estimate of loss due to customers' inability to make payments, recognized as an expense in accounting.

Allowance Method

An accounting technique used to estimate and account for doubtful accounts, providing an allowance for accounts receivable that may not be collectible.

Uncollectible Account

A receivable that a company has given up on collecting due to the debtor's inability to pay, also known as a bad debt.