All of the Following Are True of Promoters of a Corporation

question 49

Multiple Choice

All of the following are true of promoters of a corporation EXCEPT:

• A) They may make contracts in the name of the corporation.
• B) They solicit investors to begin the corporation.
• C) They continue to solicit capital whenever needed after incorporation.
• D) They prepare the formal documents of incorporation.

---

Definitions:

Direct Write-off Method

An accounting method where bad debts are expensed only when they are deemed uncollectible.

Allowance Account

An account used to record adjustments for potential future losses or defaults on receivables, essentially reducing the value of accounts receivable to a more realistic figure.

Accounts Receivable

Debts incurred by customers to a company for using or obtaining its goods or services without making immediate payment.

Allowance Method

An accounting technique that adjusts accounts receivable for the estimated uncollectible amounts.