Fact Pattern 28-1B (Questions B8 and B9 Apply)

question 21

Multiple Choice

Fact Pattern 28-1B (Questions B8 and B9 apply)
Dana takes her car to Efficient Auto Repair Service, which repairs the car and bills Dana for $500. She writes out a check drawn on First Choice Bank, but later, believing that Efficient Auto did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 28-1B. First Choice

• A) is liable to Efficient Auto for the amount of the check.
• B) must stop payment if First Choice has a reasonable time to act.
• C) need not follow Dana's order because it was issued after the check.
• D) need not follow Dana's order unless the check was certified.

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Definitions:

Accounting Process

A systematic series of actions to record, summarize, and report the financial transactions of a business over a period, resulting in the preparation of financial statements.

Journals

Official records where business transactions are entered before they are transferred to accounts in the general ledger.

Ratios

Quantitative relationships between two or more values, often used for financial analysis, to assess the performance, health, and prospects of a business.

Ledgers

Financial records that contain a detailed account of all the financial transactions of a business.