Which Statement Is Correct About the Creation of a Security

question 40

Multiple Choice

Which statement is correct about the creation of a security interest?

• A)The secured party must give a consumer good to get the security agreement.
• B)A written agreement is necessary to create a security interest.
• C)The secured party must be a bank.
• D)To create a security interest,either a written agreement is necessary or the secured party is in possession of the collateral.
• E)The debtor has no actual rights to the collateral until final payment is made.

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Definitions:

Lease Capitalization

The process of recognizing and recording a lease as an asset and a liability on the balance sheet, reflecting its long-term nature.

GAAP

Generally Accepted Accounting Principles; a collection of commonly followed accounting rules and standards for financial reporting.

IFRS

International Financial Reporting Standards, a set of accounting standards designed to ensure transparency, accountability, and efficiency in financial statements globally.

Fair Value

The estimated price at which an asset can be bought or sold in a current transaction between willing parties, other than in a liquidation sale.