Rainey Signs a Promissory Note for $10,000 in Favor of State

question 31

Multiple Choice

Rainey signs a promissory note for $10,000 in favor of State University (SU) .The note is undated but specifies that it is "payable one month after date." This note is

• A)negotiable.
• B)nonnegotiable,because one month is not a reasonable time.
• C)nonnegotiable,because there is no option to pay early.
• D)nonnegotiable,because the maturity date cannot be deter?mined from the face of the instrument.

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Definitions:

Sales On Account

Transactions where goods or services are sold to a customer with an agreement that payment will be made at a later date.

Cost Of Goods Sold

The total cost directly associated with the production of the goods sold by a company.

Times Interest Earned

A ratio that measures a company's ability to meet its interest obligations, calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.