James Is the Owner of LowCal, a Local Sandwich Bar

question 19

Multiple Choice

James is the owner of LowCal, a local sandwich bar.He offers to sell the business to Jansen, a wealthy 17-year old, for $50 000.Jansen accepts the offer but on the day when the contract is to be performed, James tells Jansen that he has changed his mind and no longer wishes to sell the business.What can Jansen do?

• A)Nothing, because Jansen is a minor and therefore incapable of enforcing a contract.
• B)Enforce the contract, because sandwiches are food and therefore it is a contract for 'necessaries'.
• C)Enforce the contract, because contracts are still enforceable by minors even if they are not enforceable against minors.
• D)Nothing, because James is entitled to change his mind.

---

Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts to prepare the books for the next period.

Adjusting Entries

Journal entries made in accounting to update the records for expenses and revenues that have accrued but not yet been recorded.

Unadjusted Trial Balance

A listing of all the accounts and their balances from the ledger, before any adjusting entries are made for preparing financial statements.

End-of-period Spreadsheets

Summarizing documents prepared at the end of an accounting period that compile balances from ledgers for financial reporting.