The Consideration Element of a Contract States That ______

question 159

Multiple Choice

The consideration element of a contract states that ______.

• A) a contract must be intended to accomplish a legal purpose
• B) a contract must include a legitimate offer and a legitimate acceptance
• C) something of value must be exchanged between the two parties
• D) the parties entering into a contract must have the capacity to do so

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Definitions:

Incremental Cash Flows

The additional cash flow a business receives from taking on a new project or investment.

Replacement Decision

The evaluation process for determining whether to repair, maintain or replace an asset or piece of equipment.

Volume Of Operations

The scale or magnitude of the business activities that a company carries out in a specific period.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and thus should not be considered in new decision making.