Bob Gates, Aged 16, Looks 19

question 55

Multiple Choice

Bob Gates, aged 16, looks 19. He is also mentally incompetent, but it is not obvious that he is. Bob buys a top of the line computer from a salesperson, who has no idea that he is under age and incompetent. Bob paid $3,800 cash for the computer. On what grounds can Bob cancel the contract?

• A)Mental incompetency alone
• B)Because he is a minor
• C)Because he paid cash for the computer
• D)Both A and B
• E)A, B and C

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Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained rather than distributed to shareholders or used to pay dividends.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating costs.

Dividend

A part of a company's profits paid out to its shareholders, often as cash or extra shares.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing corporation, reducing the amount of outstanding stock on the market.