Edith Purchases What Is Represented to Be a New DVD

question 37

Multiple Choice

Edith purchases what is represented to be a new DVD player from Big Al's Electronic Emporium,by giving Al a check for $200 drawn on Big Bank.Edith then discovers that the DVD player is a used model and calls Big Bank to place a stop-payment order on the check.Big Al negotiates the check to John who qualifies as a holder in due course.John presents the check to Big Bank the next day,and Big Bank pays the check.Which of the following statements is most accurate?

• A)For recourse,Edith would have to pursue Big Al on her misrepresentation claim.
• B)Edith may use her personal defense of misrepresentation to have her account recredited by Big Bank.
• C)Edith may pursue both Big Bank and John for the amount taken from her account.
• D)If Big Bank had refused to pay the check,John would have had no recourse against Edith.

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Definitions:

Cash Flow Statement

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Financial Reporting

The process of producing statements that disclose an organization's financial status to management, investors, and regulatory authorities.

Auditing

The process of reviewing and assessing the financial statements of an entity to ensure accuracy and compliance with accounting standards.

International Auditing Standards

Rules and guidelines set for auditing practices internationally to ensure consistency, reliability, and accuracy of financial statements.