Which of the Following Does NOT Correctly Describe the Implications

question 40

Multiple Choice

Which of the following does NOT correctly describe the implications of an executory contract on the accounting entries and/or disclosures to be made by the purchaser and/or seller?

• A) Assets and liabilities are usually recorded at inception of the contract.
• B) Assets and liabilities are usually not recorded at inception of the contract.
• C) Contract details should be disclosed if the amounts are abnormal in relation to the entity's normal business operations.
• D) Assets and liabilities are recognized as performance has occurred.

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Definitions:

Misrepresentations

False or misleading statements that can lead someone to enter into an agreement or make a decision under false pretenses.

Vicarious Liability

A legal principle where one party is held responsible for the actions or omissions of another party.

Vicariously Liable

The legal responsibility of one party for the actions of another, based on a special relationship, such as an employer being liable for the actions of an employee.

Independent Contractor

An individual or entity contracted to perform work for another entity as a non-employee, retaining control over how the work is executed.