Which of the Following Statements Is True of Commercial Paper

question 12

Multiple Choice

Which of the following statements is true of commercial paper?

• A) It cannot be used as a means of extending credit.
• B) It is covered in Article 5 and Article 6 of the Uniform Commercial Code.
• C) It can be accepted as a substitute for money.
• D) It lacks the attribute of negotiability.

---

Definitions:

Direct Labor-Hours

The sum of hours contributed by workers directly participating in the creation of a product or the execution of a service.

Variable Manufacturing Overhead

Costs in manufacturing that vary directly with the level of production output, such as utilities and raw materials.

Fixed Manufacturing Overhead

Costs associated with manufacturing that remain constant regardless of the level of production, such as rent and salaries of managerial staff.

Machine-Hours

A measurement unit used in accounting and manufacturing to allocate costs to products based on the number of hours machines are operated during the production process.