When the Security Interest Is Perfected and the Buyer Knows

question 47

Multiple Choice

When the security interest is perfected and the buyer knows of its existence, a buyer in the ordinary course of business:

• A) is subject to the security interest created by his seller.
• B) takes the purchase free from a security interest created by his seller.
• C) takes the purchase free from a security interest only if the person is buying farm products from a person engaged in a farming operation.
• D) is not protected if the dealership is in default of its loan agreement.

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Definitions:

Controller

A senior financial officer within a company responsible for overseeing accounting operations, financial reporting, and internal controls.

Operating Cycle

The duration of time from the purchase of inventory to the collection of receivables from the sale of that inventory, critical for managing cash flow.

Accounts Payable Period

The average number of days it takes a company to pay off its suppliers and creditors.