Michael Agrees to Buy Joshua's Company After Joshua Tells Him

question 1

True/False

Michael agrees to buy Joshua's company after Joshua tells him that it makes a gross profit of approximately £1 million per year. John provides documents which actually indicate that the company's profits have never surpassed £100,000, but Michael fails to read them carefully before signing the contract. Can Michael rescind the contract due to Joshua's misrepresentation?

---

Definitions:

Operating Activities

Business activities related to the day-to-day operations that generate revenue, such as sales and purchasing of inventory.

Indirect Method

In accounting, a method used to calculate cash flows from operating activities by starting with net income and adjusting for non-cash transactions.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Cash Dividends

The distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.