Mark Fails to Reveal a Material Fact in a Business

question 31

Multiple Choice

Mark fails to reveal a material fact in a business deal with Nancy. This constitutes fraudulent misrepresentation if

• A) Mark is not aware of the fact or his failure to reveal it.
• B) the fact concerns value or quality.
• C) the fact concerns a serious defect known to Mark but not to Nancy.
• D) any of the choices.

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Definitions:

Bad Debt Expense

The estimated amount of credit sales that a company does not expect to collect due to customer's inability to fulfill payment obligations.

Uncollectible

Financial term referring to accounts receivable that are considered unlikely to be collected due to debtor default.

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.