Which of the Following Is NOT an Example of the Exception

question 1

Multiple Choice

Which of the following is NOT an example of the exception to the rule regarding liquidated debt?

• A) A car owner offers her car to the bank as full settlement of the remaining balance owed on the loan and the bank accepts.
• B) A student offers the use of his picture in a school brochure in full settlement of the $100 debt he owes to the university bookstore and the school accepts.
• C) A debtor disputes the amount of money that is owed, so the debtor pays half of the debt and the creditor cashes the check.
• D) A debtor offers a credit card company a rare book in full settlement of a $3,000 debt and the credit card company accepts.
• E) None of the above choices are correct, since there are no exceptions to the rule regarding liquidated debt.

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Definitions:

LIFO Cost Flow

A method of stock valuation where the latest items added to the inventory are the first ones to be sold.

Cost of Goods Sold

The direct expenses tied to the production of goods sold by a company, including material and labor costs.

Net Income

A company's profit amount after all deductions for expenses and taxes from revenue have taken place.

FIFO Cost Flow

An inventory valuation method (First In, First Out) where goods first purchased or produced are sold or used first.