Question 1

A(n) ____ allows more debt to be added to the account over time.

Accepted Answer

A)  open account 
B)  closed account 
C)  installment account 
D)  collecting account 
E)  none of the other choices are correct 
A)  open account 
B)  closed account 
C)  installment account 
D)  collecting account 
E)  none of the other choices are correct

Question 2

A guarantor is the same as a surety.

Accepted Answer

A) True 
 B)False

Question 3

When a debtor petitions the court for Chapter 7 bankruptcy, which item(s) must be provided?

Accepted Answer

A)  lists of all creditors with amounts owed them 
B)  a list of all property owned by the debtor 
C)  a statement of the financial affairs of the debtor 
D)  a statement of the debtor's current income and expenses 
E)  all of the other choices 
A)  lists of all creditors with amounts owed them 
B)  a list of all property owned by the debtor 
C)  a statement of the financial affairs of the debtor 
D)  a statement of the debtor's current income and expenses 
E)  all of the other choices

Question 4

If a debtor is insolvent, the unsecured creditor:

Accepted Answer

A)  can only collect half the bill 
B)  can only collect three quarters of the bill 
C)  cannot collect the bill 
D)  can collect the bill, plus interest 
E)  can collect the bill, plus punitive damages 
A)  can only collect half the bill 
B)  can only collect three quarters of the bill 
C)  cannot collect the bill 
D)  can collect the bill, plus interest 
E)  can collect the bill, plus punitive damages

Question 5

After secured creditors are paid, all other creditors share the proceeds of the debtor's estate equally.

Accepted Answer

A) True 
 B)False

Question 6

An "acknowledgment by a bank" that it has received money from a customer with a promise by the bank that it will repay the money received at a date specified or, in some instances, on demand is a:

Accepted Answer

A)  certificate of deposit 
B)  certificate of payment 
C)  balloon certificate 
D)  real estate certificate 
E)  draft certificate 
A)  certificate of deposit 
B)  certificate of payment 
C)  balloon certificate 
D)  real estate certificate 
E)  draft certificate

Question 7

Orders to pay include drafts and checks.

Accepted Answer

A) True 
 B)False

Question 8

Under the UCC, ____ includes goods held for sale as well as raw materials.

Accepted Answer

A)  collateral 
B)  intangible property 
C)  inventory 
D)  investment 
E)  sales 
A)  collateral 
B)  intangible property 
C)  inventory 
D)  investment 
E)  sales

Question 9

Bankruptcy law:

Accepted Answer

A)  is federal statutory law 
B)  is controlled by the Bankruptcy Code 
C)  is largely state common law 
D)  is federal statutory law, primarily the Bankruptcy Code 
E)  is federal statutory law, primarily the Bankruptcy Code, and state bankruptcy codes 
A)  is federal statutory law 
B)  is controlled by the Bankruptcy Code 
C)  is largely state common law 
D)  is federal statutory law, primarily the Bankruptcy Code 
E)  is federal statutory law, primarily the Bankruptcy Code, and state bankruptcy codes

Question 10

A cashier's check is a form of check in which the bank is both the drawer and the drawee.

Accepted Answer

A) True 
 B)False

Question 11

Although commercial paper may be either negotiable or nonnegotiable, only ____ fall under the UCC.

Accepted Answer

A)  nonnegotiable instruments 
B)  negotiable instruments 
C)  real instruments 
D)  unconditional instruments 
E)  conditional instruments 
A)  nonnegotiable instruments 
B)  negotiable instruments 
C)  real instruments 
D)  unconditional instruments 
E)  conditional instruments

Question 12

In Summers Group v. Tempe Mechanical, Summers (Rexel) sold electrical materials used in a construction project that went into bankruptcy. In the litigation to determine where various claimants stood in their efforts to collect, the appears court held that because Summers was the first lienholder to file a claim, it stood first to collect.

Accepted Answer

A) True 
 B)False

Question 13

Brandon files for a Chapter 11 bankruptcy on behalf of his company, Brandon's B-B-Q. The company is allowed to continue its operations. During this period Brandon is:

Accepted Answer

A)  the debtor in possession 
B)  the guarantor in extremis 
C)  a trustee 
D)  a and b 
E)  a and c 
A)  the debtor in possession 
B)  the guarantor in extremis 
C)  a trustee 
D)  a and b 
E)  a and c

Question 14

If the principal does not pay the creditor, and the surety has to satisfy the debt, the principal:

Accepted Answer

A)  is only obligated to repay the surety 25% of the debt 
B)  is not obligated to repay the surety 
C)  is only obligated to repay the surety in some states 
D)  is only obligated to repay the surety 50% of the debt 
E)  none of the other choices are correct 
A)  is only obligated to repay the surety 25% of the debt 
B)  is not obligated to repay the surety 
C)  is only obligated to repay the surety in some states 
D)  is only obligated to repay the surety 50% of the debt 
E)  none of the other choices are correct

Question 15

Under Article 3 of the UCC, a note is a promise by one party to pay a certain sum of money to another party. Two parties are involved: the maker and the payee. Payment may be set at some time in the future.

Accepted Answer

A) True 
 B)False

Question 16

If a person files for bankruptcy, they must take a class on debtor education.

Accepted Answer

A) True 
 B)False

Question 17

A creditor is a person or business who:

Accepted Answer

A)  lends money to someone else 
B)  allows goods to be purchased by someone else 
C)  allows services to be purchased by someone else 
D)  all of the other choices 
E)  none of the other choices 
A)  lends money to someone else 
B)  allows goods to be purchased by someone else 
C)  allows services to be purchased by someone else 
D)  all of the other choices 
E)  none of the other choices

Question 18

To create a legally valid security interest, a business must ensure that the interest is:

Accepted Answer

A)  perfected 
B)  debated 
C)  united 
D)  detached 
E)  exposed 
A)  perfected 
B)  debated 
C)  united 
D)  detached 
E)  exposed

Question 19

In a contract for suretyship the third party who is responsible for the borrower's payment obligations, or performance, to a creditor is known as the:

Accepted Answer

A)  banker 
B)  borrowee 
C)  principal 
D)  lender 
E)  none of the other choices are correct 
A)  banker 
B)  borrowee 
C)  principal 
D)  lender 
E)  none of the other choices are correct

Question 20

A mortgage usually contains:

Accepted Answer

A)  a description of the property 
B)  any warranties relative to the property 
C)  a statement of the debt 
D)  a statement of the mortgagor's duties concerning taxes, insurance, and repairs 
E)  all of the other specific choices are correct 
A)  a description of the property 
B)  any warranties relative to the property 
C)  a statement of the debt 
D)  a statement of the mortgagor's duties concerning taxes, insurance, and repairs 
E)  all of the other specific choices are correct

Exam 13: Negotiable Instruments, Credit, and Bankruptcy

A(n) ____ allows more debt to be added to the account over time.

A guarantor is the same as a surety.

When a debtor petitions the court for Chapter 7 bankruptcy, which item(s) must be provided?

If a debtor is insolvent, the unsecured creditor:

After secured creditors are paid, all other creditors share the proceeds of the debtor's estate equally.

An "acknowledgment by a bank" that it has received money from a customer with a promise by the bank that it will repay the money received at a date specified or, in some instances, on demand is a:

Orders to pay include drafts and checks.

Under the UCC, ____ includes goods held for sale as well as raw materials.

Bankruptcy law:

A cashier's check is a form of check in which the bank is both the drawer and the drawee.

Although commercial paper may be either negotiable or nonnegotiable, only ____ fall under the UCC.

Brandon files for a Chapter 11 bankruptcy on behalf of his company, Brandon's B-B-Q. The company is allowed to continue its operations. During this period Brandon is:

If the principal does not pay the creditor, and the surety has to satisfy the debt, the principal:

Under Article 3 of the UCC, a note is a promise by one party to pay a certain sum of money to another party. Two parties are involved: the maker and the payee. Payment may be set at some time in the future.

If a person files for bankruptcy, they must take a class on debtor education.

A creditor is a person or business who:

To create a legally valid security interest, a business must ensure that the interest is:

In a contract for suretyship the third party who is responsible for the borrower's payment obligations, or performance, to a creditor is known as the:

A mortgage usually contains:

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