A Draft Is Payable "To the Order of Joe Jones

question 41

Multiple Choice

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment. Should the drawer pay Sally?

• A) No, unless Joe Jones's name is crossed off.
• B) No, unless "bearer" is handwritten.
• C) Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment.
• D) No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones.

Understand the treatment of underapplied or overapplied overhead in financial records.

Understand and apply the concept of predetermined overhead rates in the calculation of applied manufacturing overhead.

Identify and calculate underapplied or overapplied manufacturing overhead and its implications.

Understand the distinction between job-order costing and process costing systems.