A(n)________ Exists If Both Parties Know the Object of the Contract

question 58

Short Answer

A(n)________ exists if both parties know the object of the contract but are mistaken as to its value.

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Definitions:

Temporary Account

A temporary account is an account that is closed at the end of each accounting period, with its balance transferred to a permanent account.

Real Accounts

Accounts related to assets, liabilities, and equity that are not closed at the end of the accounting period.

Nominal Accounts

Accounts that are closed at the end of each accounting period, including revenue, expense, and withdrawal accounts, which are used to calculate the period's net income or loss.

Income Summary

An account in the ledger that is used to summarize the revenue and expenses of a period, facilitating the transfer of their net effect to retained earnings.