Cecilia Made a Check Out to Gideon for $15

question 7

Multiple Choice

Cecilia made a check out to Gideon for $15.Gideon fraudulently changed the check to read $150,and cashed it at Corner Bank.Is Cecilia discharged from liability on the check?

• A)Yes, Cecilia owes nothing on the check because alteration of a check is a real defense and real defenses are good even against holders in due course.
• B)No, Cecilia pays $150 because of the impostor rule.
• C)No, Cecilia pays $150 because she in not an indorser or accommodation party.
• D)Yes, Cecilia owes nothing unless Corner Bank is a holder in due course in which case she owes the original $15.

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Definitions:

Purchase Of Equipment

The acquisition of equipment that a business requires for its operations, treated as a capital expenditure.

Investing Activities

Transactions and events that involve the purchase and sale of long-term assets and other investments, not directly related to the entity's normal line of business.

Long-Term Note

A debt security that matures in more than one year, requiring the borrower to repay the principal and interest over an extended period.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of an organization, such as issuing stocks or bonds, and repaying bank loans.