Which of the Following Statements Is TRUE with Respect to Notice

question 3

Multiple Choice

Which of the following statements is TRUE with respect to notice of dishonour?

• A)Notice of dishonour only needs to be provided against a party that did not endorse an instrument.
• B)In some circumstances,an endorser may be held liable even if it did not actually receive notice of dishonour following the dishonour of a cheque.
• C)Notice of dishonour is significant mainly because it relieves the drawee of a cheque of liability.
• D)Once notice of dishonour is given to one endorser,it is automatically effective against all prior endorsers.
• E)To be effective,notice of dishonour normally can be provided any time within six months of dishonour.

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Definitions:

Interperiod Tax Allocation

An accounting technique that aims to match tax expenses with the revenues for the period in which they were earned, regardless of when taxes are paid.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxation by governmental authorities.

Book Income

Book income refers to the amount of income reported by a company in its financial statements according to accounting principles, before any adjustments for tax purposes.

Deferred Tax Liabilities

Future tax payments a company is obligated to pay the government, arising due to temporary differences between its taxable income and its accounting earnings.