Martha and Jim Enter into an Agreement Whereby Jim Agrees

question 19

Multiple Choice

Martha and Jim enter into an agreement whereby Jim agrees to paint Martha's car. The contract states that the car is to be painted green. Martha changes her mind and wants the car to be painted blue instead. Jim agrees to paint the car blue. This type of discharge of contract is described as .

• A) accord and satisfaction
• B) novation
• C) condition precedent
• D) condition subsequent

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Definitions:

Book Value

The net value of an asset or liability recorded on the balance sheet, determined by subtracting its accumulated depreciation or amortization from its original cost.

Equity Method

An accounting technique used to record the investments in other companies where the investor has significant influence but does not have full control.

Gross Profit

The difference between revenue and the cost of goods sold before accounting for other expenses.

Intra-Entity Sales

Transactions of goods, services, or assets between divisions within the same organization.