Explain the Distinction Between the Effects of a Mistake That

question 21

Essay

Explain the distinction between the effects of a mistake that prevents the creation of a contract and a mistake that renders the purpose of a contract impossible. Provide an example of each.

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Definitions:

Trial Balance

A trial balance is a bookkeeping report that lists the balances of all ledgers in two columns, debits, and credits, ensuring that total debits equal total credits.

Journalizing

The process of recording transactions in a company's journal, marking the first step in the accounting cycle.

Posting Process

The procedure of transferring journal entry amounts to their respective accounts in the ledger.

Debit Posted

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, reflected on the left side of an account.