Franz signs a $1,000 note payable to LongView Bank.If,to help Franz get the loan approved,Amy also signs the note as an accommodation maker:

Question

Quizplus · Accepted Answer

When Amy signs as an accommodation maker, she is assuming primary liability for the note along with Franz. This means that both Franz and Amy are responsible for paying back the full amount of the loan to the bank. Choice A is incorrect because an accommodation indorser on a check only assumes secondary liability. Choice B is incorrect because both parties have equal primary liability. Choice C is partially correct because Amy does have secondary liability, but she also has primary liability as an accommodation maker.

Franz Signs a $1,000 Note Payable to LongView Bank