John Bought a Car for $5000

question 98

Multiple Choice

John bought a car for $5000. Shortly afterwards, a bailiff acting for an unpaid security interest holder who had properly registered his financing statement seized the car. In which of the following circumstances will John be least likely to recover what he is owed?

• A) If the seller told John that the car was free and clear of any encumbrances even though John didn't ask
• B) If the seller told John that the car was free and clear of any encumbrances after John asked
• C) If neither John nor the seller said anything about whether the car was free and clear of encumbrances
• D) If John forgot to check the registry for liens or encumbrances
• E) If the seller can no longer be located

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Definitions:

Salary Expense

The total amount paid to employees for services rendered during a specific period before any deductions are made.

Fees Earned

Revenue generated from services provided.

Common Stock

A kind of stock that signifies having a stake in a company, accompanying the power to vote and the possibility of receiving dividends.

Stockholders' Equity

After liabilities are removed, what remains of the assets in a corporation, indicating an ownership share.