A Transferor May Be Able to Set Aside a Negotiation

question 24

Multiple Choice

A transferor may be able to set aside a negotiation obtained by fraud or duress unless:

• A) a minor is involved.
• B) the negotiation was part of an illegal transaction.
• C) the negotiation was beyond the powers of the corporation.
• D) the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.

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Definitions:

Partial Payment

A payment made that is not in full settlement of a debt but is instead a portion of the total amount owed.

Allowance for Doubtful Accounts

An estimate of the amount of credit sales that are expected to become uncollectible, used to adjust accounts receivable to its net realizable value.

Bad Debt Expense

This represents the estimate of non-collectible accounts receivable that occurs in a given period, reflecting potential losses due to credit sales.

Credit Sales

Sales transactions where the payment is delayed as opposed to immediate cash payment, generating accounts receivable.