Consideration for a Promise Will Be Sufficient to Establish a Binding

question 44

Multiple Choice

Consideration for a promise will be sufficient to establish a binding agreement where:

• A)the price paid by the promisee is a vague promise to do something or refrain from doing something.
• B)the price paid for the promise was paid before the promise was made.
• C)the price paid by the promisee was the fulfilment of a prior legal obligation, that is, the performance of something the promisee was already legally obliged to do.
• D)the price paid has some legal value even if it is not a fair or adequate price.

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Definitions:

Perpetual Inventory Method

The perpetual inventory method is a system of accounting for inventory that continuously updates the quantity and value of inventory items after every transaction.

Journalize

The act of recording transactions in the accounting journals as part of the bookkeeping process.

Terms 2/10, N/30

Payment terms indicating a 2% discount if paid within 10 days, otherwise the net amount (total invoice) is due within 30 days.

Debit Memorandum

A document issued by a buyer to a seller indicating a debit made to the seller's account, often due to returned goods or errors in the invoice.