To Which of the Following Transactions Would the Implied Warranty

question 73

Multiple Choice

To which of the following transactions would the implied warranty of merchantability apply?

• A)The sale of a used toaster by a homeowner at a garage sale.
• B)The purchase of a bag of potato chips from a vending machine.
• C)The sale of a new house by a contractor.
• D)All of the above.
• E)None of the above.

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Definitions:

Excess Cash

Funds that exceed the normal operating needs of a company, which might be used for investments, acquisitions, or improving financial ratios.

Marketable Securities

Financial instruments that can easily be converted to cash due to their high demand and short maturity period.

Lockbox System

A service offered by banks to companies for the receipt of payment from customers, under which payments are sent directly to a location accessible by the bank.

Processing Float

The time difference between when a transaction is initiated and when the funds are available in the account, affecting the usable balance.