Would an Instrument Containing the Following Language Be Negotiable? "Harold

question 57

Multiple Choice

Would an instrument containing the following language be negotiable? "Harold T. Stone, as President, hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redtyn Corporation, payable from its corporate assets. (Signed) Harold T. Stone as President, Redtyn Corporation."

• A) No, because the promise refers to another contract.
• B) No, because its payment is limited to a particular fund.
• C) Yes, because Redtyn is a business entity.
• D) Yes, because it meets all the requirements of negotiability.

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Definitions:

Capital

Financial resources or assets owned by a business, used to fund operations and investments.

Net Loss

A financial situation where the total expenses of a business exceed its total revenues, indicating a negative profit.

Income Summary

An account in which the revenues and expenses are summarized during the closing process, used to transfer net income or loss to owner's equity.

Net Income

The net income a company earns once all costs and taxes are deducted from its total revenues.