Gail Owes $5,000 in Unpaid Taxes

question 44

Multiple Choice

Gail owes $5,000 in unpaid taxes. Using the back of an old t-shirt, she executes an instrument for $5,000 that otherwise meets the requirements for negotiability. This instrument is likely

• A) ​negotiable.
• B) ​nonnegotiable, because an instrument must be on paper.
• C) ​nonnegotiable, because a t-shirt is not sufficiently permanent.
• D) ​nonnegotiable, because the government does not appreciate it.

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Definitions:

Par Value

The face value of a stock or bond as designated by the issuer, which has little relation to its market value but is important for accounting purposes.

Investing Activities

Financial activities related to the acquisition or sale of long-term assets and investments.

Bonds Payable

Long-term debt securities issued by a corporation or government entity, promising to pay the holder a specified amount of interest over a specified period and to repay the principal at maturity.

Net Cash

The amount of cash after subtracting cash outflows from cash inflows.