Which of the Following Statements Is Not True When FLK

question 99

Multiple Choice

Which of the following statements is not true when FLK Company discounts a note receivable to the bank?

• A)FLK may ultimately have to pay the bank when the note is due.
• B)If the maker of the note pays the bank on time,no liability will result to FLK.
• C)FLK will receive the maturity value from the bank.
• D)A contingent liability arises for FLK.

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Definitions:

Corporation's Assets

The resources owned by a corporation that have economic value and can be used to meet its financial obligations.

Preferred Stockholders

Preferred stockholders are investors who own shares of a company's preferred stock, which often provides fixed dividends and priority over common stockholders in asset liquidation.

Current-Year Dividends

The dividends paid by a company to its shareholders from its earnings of the current fiscal year.

Common Stockholders

Owners of common stock in a corporation, who have voting rights and may receive dividends, but are typically last in line to receive assets in the event of liquidation.