First Bank loaned $100,000 to Central Office Supply Store to purchase computers for its inventory. Central signed a financing agreement, which First Bank duly filed in the appropriate public office. Lynn came into Central's store and purchased a
computer that was subject to the security interest held by First Bank. Assuming that Lynn is a buyer in the ordinary course of business, whose interest in the computer has priority?
Lynn is a buyer in the ordinary course of business from a merchant. Under the Code, even though First Bank has a perfected security interest in the goods, Lynn takes the computer free of that interest. This is true regardless of whether she had knowledge of the security interest of First Bank.
You might also like to view...
Bad debt expense is normally reported on the income statement as a(n)
A) operating expense. B) element of cost of goods sold. C) financial expense in the other items section. D) contra-revenue amount.
Patty buys a Persian rug from James, a plumber, in an online auction. James called Patty on Wednesday to inform her that she submitted the winning bid and that she could pick it up anytime or he would ship the rug to her on Friday. On Thursday, the rug was destroyed in a garage fire at James' house. Which of the following statements is true in this case?
A. Patty bears the loss as James was only providing a service. B. James bears the loss as he has tendered delivery of goods. C. Patty bears the loss as James is not a merchant. D. James bears the loss as he has not delivered the goods.
The matching rule relates the least to
A) income measurement. B) the cash basis of accounting. C) revenues and expenses. D) a direct relationship between expenses and revenues.
Discuss the differences between business and consumer transactions.
What will be an ideal response?