The Rationale for the Fictitious Payee Rule Is That

question 66

Multiple Choice

The rationale for the fictitious payee rule is that:

• A)the bank should bear the immediate loss of the forged instruments.
• B)the holder in due course should bear the immediate loss of the forged instruments.
• C)the employer of the wrongdoer should bear the immediate loss of forged instruments.
• D)the wrongdoer should bear the immediate loss of the forged instruments.

---

Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, used to cover fixed costs and to generate profit.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Net Loss

A financial situation that occurs when a company's total expenses exceed its revenues, indicating a negative profit.

Variable Costs

Costs that change in proportion to the level of activity or volume, such as raw materials and direct labor.