Which of the Following Is True Regarding the Liability of an Accommodation

question 4

Multiple Choice

Which of the following is true regarding the liability of an accommodation party?

• A) As a maker, an accommodation party has primary liability; but as an endorser, the party has secondary liability.
• B) An accommodation party has primary liability both as a maker and as an endorser.
• C) An accommodation party has secondary liability both as a maker and as an endorser.
• D) An accommodation party has primary liability as either a maker or endorser only if all other parties to the instrument have filed bankruptcy.
• E) An accommodation party has primary liability as a maker only if all other parties have filed bankruptcy, and secondary liability in any other case regardless of whether the accommodation party is the maker or endorser.

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Definitions:

Medicare Taxes

Taxes collected from earnings to fund the Medicare program, providing health insurance to individuals aged 65 and older or those who meet specific criteria.

FUTA

The Federal Unemployment Tax Act, which imposes a payroll tax on businesses to fund state workforce agencies.

SUTA

State Unemployment Tax Act, the legislation enabling state governments to collect unemployment insurance taxes from employers.

State Rate

A specific tax or fee rate determined by a state government, often applied to sales, income, or property.