A Promise by a Creditor to Accept Less Than Full

question 18

Multiple Choice

A promise by a creditor to accept less than full payment from a debtor is

• A)unenforceable because the creditor did not provide consideration.
• B)enforceable because the promisee accepts the offer.
• C)a bilateral contract.
• D)unenforceable because it is a gratuitous promise.
• E)enforceable because it gives rise to a contract.

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Definitions:

Managing Activities

The actions taken by an organization to plan, organize, direct, and control its operational, financial, and administrative tasks.

Financing Activities

Activities relating to raising money from investors and creditors such as the issuance of stocks and bonds and long-term notes; also, repurchase of outstanding stock and retiring bonds and notes as well as paying dividends.

Retained Earnings Activities

The portion of net income left over for the business after it has paid out dividends to its shareholders, often reinvested into the business or kept as a reserve.

Operating Revenue

Income earned from a company's core business operations, excluding revenue from non-operating sources like investments.