On Behalf of First-Rate Capital, Inc

question 29

Multiple Choice

On behalf of First-Rate Capital, Inc., Greg signs an instrument promis?ing to pay $5,000 in gold to Hot Funds, Inc., on May 15. This in?strument is

• A) negotiable.
• B) nonnegotiable, because gold is not a medium of exchange author?ized or adopted by a government as currency.
• C) nonnegotiable, because it does not recite any consideration.
• D) nonnegotiable, because it is for an amount of $500 or more.

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Definitions:

Net Income

The final earnings of a corporation, calculated by subtracting all operating costs and tax liabilities from its total sales revenue.

Accounts Receivable

Balances owed to a company by its customers for goods or services provided on credit.

Direct Method

A costing method primarily used in cost accounting that allocates service department costs directly to production departments without any intermediate allocations.

Prepaid Expense

Payments made for goods or services to be received in the future, considered as an asset on the balance sheet until used or consumed.