A Drawee Is Primarily Liable on a Draft When ________

question 58

Multiple Choice

A drawee is primarily liable on a draft when ________.

• A) the instrument is issued
• B) the instrument is dishonored
• C) the instrument is presented for payment
• D) the drawee is an acceptor to the instrument

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Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a firm can increase its profits by increasing sales.

Fixed Operating Costs

Expenses that do not change with the volume of production, such as salaries and rent.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Breakeven Volume

The quantity of goods or services that must be sold to cover fixed and variable costs, resulting in no profit or loss.