Question 1

When two parties have perfected security interests in the same collat?eral,neither party has priority.

Accepted Answer

A) True 
 B)False  False

Question 2

The state office in which a financing statement should be filed depends on the debtor's location.

Accepted Answer

A) True 
 B)False  True

Question 3

Qwik Credit Corporation lends $20,000 to Ross.A financing statement is filed on May 1,but the security agreement is not signed until Ross gets the money on May 4.Ross also borrows money from State Bank,which advances funds,files a financing statement,and signs a security agree?ment on May 2.Ross used the same property as collateral for both loans.In a dispute between the lenders over rights to the collateral,Qwik Credit will

Accepted Answer

A)  lose,because State Bank perfected first.
B)  lose,because State Bank's interest attached first.
C)  win,because Qwik Credit filed first.
D)  win,because Qwik Credit's interest attached first. A

Question 4

A secured party can release the col?lateral described in a filed fi?nancing statement only if the debtor has paid the debt.

Accepted Answer

A) True 
 B)False

Question 5

County Bank wants to perfect its security interest in collateral owned by Delta Sales Company.Most likely,a financing statement should be filed with

Accepted Answer

A)  the local chamber of commerce.
B)  the county clerk.
C)  the federal loan officer.
D)  the secretary of state's office.

Question 6

When two parties have unperfected security interests in the same collat?eral,neither party has priority.

Accepted Answer

A) True 
 B)False

Question 7

A security interest is enforceable only if the collateral is not in the debtor's possession.

Accepted Answer

A) True 
 B)False

Question 8

Agricultural Investments,Inc. ,files a financing statement to provide no?tice of its security interest in the property of Bay Farms.The initial ef?fec?tive term of a financing statement is a period of

Accepted Answer

A)  one year.
B)  two years.
C)  five years.
D)  ten years.

Question 9

A financing statement is effective for five years from the date of filing.

Accepted Answer

A) True 
 B)False

Question 10

Collateral is the subject of a security interest.

Accepted Answer

A) True 
 B)False

Question 11

Each of the following owns a Cut-Rite brand food processor: Diner's Res?taurant;Eve,a consumer;Frank,a cooking-school student;and Great Deals,a discount store.As collateral,the processor that would be classi?fied as inventory is owned by

Accepted Answer

A)  Diner's Restaurant.
B)  Eve.
C)  Frank.
D)  Great Deals.

Question 12

Bob,a forest-service engineer,buys a four-wheel-drive vehicle to use only for off-road recreational use.Under UCC Article 9,this vehicle would likely be characterized as

Accepted Answer

A)  a consumer good.
B)  an accession.
C)  equipment.
D)  inventory.

Question 13

Fact Pattern 20-3 
General Leasing Company (GLC)buys equipment for use as inventory,borrow?ing $1 million from Helpful Finance Corporation for a security in?terest in the equipment.The next day,GLC borrows $500,000 from Interstate Bank,also for a security interest in the equipment.GLC defaults on the loans.
-Refer to Fact Pattern 20-3.Suppose that two weeks after GLC takes possession of the equipment,Helpful and Interstate file financing statements,with Interstate fil?ing first.In that cir?cum?stance,the party with priority to the equipment is

Accepted Answer

A)  GLC.
B)  Helpful and Interstate proportionately.
C)  Helpful only.
D)  Interstate only.

Question 14

Mona lives in New Jersey,but she works in New York.Mona borrows $1,000 from National Bank,using her motorcycle as collateral.To perfect its security in?terest,the bank must file its financing statement in at least

Accepted Answer

A)  every state.
B)  New Jersey.
C)  New Jersey and New York.
D)  New York.

Question 15

After the proper disposition of collateral,if the secured party has not col?lected all that the debtor owes,the creditor must accept the deficiency.

Accepted Answer

A) True 
 B)False

Question 16

Regional Bank wants to perfect its security interest in timber owned by Standing Timber,Inc.Most likely,a financing statement should be filed with

Accepted Answer

A)  the local chamber of commerce.
B)  the county clerk.
C)  the federal loan officer.
D)  the secretary of state's office.

Question 17

When a secured debt is paid,the secured party must file a termination statement regardless of the goods' classification.

Accepted Answer

A) True 
 B)False

Question 18

To have an enforceable security interest in collateral that is in the pos?ses?sion of the secured party,there must be a written security agreement.

Accepted Answer

A) True 
 B)False

Question 19

A security interest is not enforceable before the creditor's rights have at?tached to the collateral.

Accepted Answer

A) True 
 B)False

Question 20

Fancee Furniture Store sells household consumer goods.To create a pur?chase-money security interest,Fancee Furniture must

Accepted Answer

A)  assign,to a collecting agent,a portion of its accounts payable.
B)  assign,to a collecting agent,a portion of its accounts receivable.
C)  extend credit for part or all of the purchase price of the goods.
D)  refer purchasers to a third-party lender.

Exam 20: Security Interest in Personal Property

When two parties have perfected security interests in the same collat?eral,neither party has priority.

The state office in which a financing statement should be filed depends on the debtor's location.

A secured party can release the col?lateral described in a filed fi?nancing statement only if the debtor has paid the debt.

County Bank wants to perfect its security interest in collateral owned by Delta Sales Company.Most likely,a financing statement should be filed with

When two parties have unperfected security interests in the same collat?eral,neither party has priority.

A security interest is enforceable only if the collateral is not in the debtor's possession.

Agricultural Investments,Inc. ,files a financing statement to provide no?tice of its security interest in the property of Bay Farms.The initial ef?fec?tive term of a financing statement is a period of

A financing statement is effective for five years from the date of filing.

Collateral is the subject of a security interest.

Each of the following owns a Cut-Rite brand food processor: Diner's Res?taurant;Eve,a consumer;Frank,a cooking-school student;and Great Deals,a discount store.As collateral,the processor that would be classi?fied as inventory is owned by

Bob,a forest-service engineer,buys a four-wheel-drive vehicle to use only for off-road recreational use.Under UCC Article 9,this vehicle would likely be characterized as

Mona lives in New Jersey,but she works in New York.Mona borrows $1,000 from National Bank,using her motorcycle as collateral.To perfect its security in?terest,the bank must file its financing statement in at least

After the proper disposition of collateral,if the secured party has not col?lected all that the debtor owes,the creditor must accept the deficiency.

Regional Bank wants to perfect its security interest in timber owned by Standing Timber,Inc.Most likely,a financing statement should be filed with

When a secured debt is paid,the secured party must file a termination statement regardless of the goods' classification.

To have an enforceable security interest in collateral that is in the pos?ses?sion of the secured party,there must be a written security agreement.

A security interest is not enforceable before the creditor's rights have at?tached to the collateral.

Fancee Furniture Store sells household consumer goods.To create a pur?chase-money security interest,Fancee Furniture must