Fritz Offers to Buy a Guitar Owned by Holle for Twice

question 33

Multiple Choice

Fritz offers to buy a guitar owned by Holle for twice what she paid for it. She accepts and hands the guitar to Fritz. Holle's delivery of the guitar is

• A)not consideration because its adequacy is unfair.
• B)not consideration because the exchange is not a bargain.
• C)consideration.
• D)not consideration because the value is not legally sufficient.

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Definitions:

Operating Expenses

Expenses incurred from the regular activities of a business, such as rent, utilities, and salaries.

Perpetual System

A method of inventory accounting in which the inventory levels are updated in real-time with each sale or purchase.

Adjusting Entry

Journal entries made at the end of an accounting period to update the accounts for accruals or deferrals that were not previously recorded.

Gross Profit

The financial measure calculated by subtracting the cost of goods sold from revenue, representing the profit a company makes after deducting the costs associated with making and selling its products.