When a Note Receivable Is Discounted, the Business That Endorses

question 55

Multiple Choice

When a note receivable is discounted, the business that endorses the note becomes potentially liable to the bank. This type of liability is called a:

• A) dependent liability.
• B) contingent liability.
• C) potential liability.
• D) conditional liability.

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Definitions:

Merger

The combination of two or more companies into a single corporate entity, often with the goal of increasing market share, reducing costs, or expanding into new segments.

Incremental Value

The additional value generated from a particular decision, investment, or action over its alternative.

Acquiring Firm

A company that purchases or takes control of another company through a merger, acquisition, or takeover.

Target Firm

A company that is the subject of a takeover attempt or an acquisition by another company.