Which of the Following May Occur When a Third Party

question 85

Multiple Choice

Which of the following may occur when a third party agrees to be liable for a debtor's loan either primarily or secondarily?

• A)A certified agreement or a suretyship,but not a guarantee
• B)Either a suretyship or a guaranty,but not a certified agreement
• C)A suretyship,a guaranty,or a certified agreement
• D)A certified agreement or a guaranty,but not a suretyship
• E)A guarantee but not a certified agreement or a suretyship

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds, which is reported on the income statement.

Pre-Acquisition Dividend

Dividends declared by a subsidiary prior to being acquired or controlled by the parent company.

Final Dividend

The last dividend payment made by a company to its shareholders for a fiscal year, after the company's final annual earnings are known.

Tax-Effect Adjustment

Adjustments made to account for the tax implications of differences between accounting and tax treatments of items, ensuring financial statements reflect future tax liabilities or assets.