Part Payment of a Debt May Provide Sufficient Consideration Under

question 20

Multiple Choice

Part payment of a debt may provide sufficient consideration under certain circumstances.Which of the following will not provide sufficient consideration?

• A)Payment of a lesser amount by a third party.
• B)Payment of a lesser amount at a different place or with different currency.
• C)A promise to refrain from (not do)taking legal action.
• D)The payment of a lesser sum prior to the due date.
• E)The payment of a lesser sum on the due date.

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Definitions:

Incurred Expense

An expense that a company has recognized on its books, representing a cost that has been encountered in the operation of the business.

Wages Paid

This refers to the total amount of remuneration paid by an employer to an employee, including salaries, commissions, and bonuses, for work performed during a specific period.

Unearned Revenue

Income received by a business for goods or services yet to be provided; considered a liability until the service or product is delivered.

Recognizes Revenue

The process of recording revenue in the financial statements when it is earned and realizable, following the accrual accounting principle.