Which Statement Best Describes the Value of Contracts to Society

question 53

Multiple Choice

Which statement best describes the value of contracts to society?

• A) Contracts can never be breached and therefore provide permanence to promises made between parties.
• B) Contracts permit parties to rely on terms and plan their business affairs accordingly.
• C) Contracts create equal bargaining power between negotiating parties.
• D) Contracts ensure that agreements are fair to both parties.

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Definitions:

Overapplied Manufacturing Overhead

Occurs when the amount of overhead applied to products or jobs during a period is greater than the actual overhead costs incurred.

Finished Goods Inventory

The value of a company’s inventory of products that are completed and ready for sale.

Underapplied

In accounting, underapplied refers to when the allocated overhead costs are less than the actual overhead costs incurred.

Direct Materials Cost

The expense associated with the raw materials directly used in the production of goods.