In Applying LCM, Market Cannot Be

question 33

Multiple Choice

In applying LCM, market cannot be:

• A) Less than net realizable value minus a normal profit margin.
• B) Net realizable value less reasonable completion and disposal costs.
• C) Greater than net realizable value reduced by an allowance for normal profit margin.
• D) Less than cost.

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Definitions:

Without Recourse

A term indicating that the holder of a financial instrument cannot demand payment from the original issuer or underwriter in the event of non-payment by the borrower.

Qualifying Words

Words in a legal document that specify conditions or modify the meaning of other words to which they apply.

Accommodation Party

An Accommodation Party is an individual or entity that signs a negotiable instrument on behalf of another, guaranteeing payment without receiving a direct benefit.

Indorser

The person who signs the back of a negotiable instrument, such as a check, thereby transferring ownership or guaranteeing payment to another party.