Barbara and Johann Are Parties to a Contract

question 38

Multiple Choice

Barbara and Johann are parties to a contract. They agree on a novation. The novation requires

• A) ​the existence of a previous, valid obligation.
• B) ​consideration greater than $5,000.
• C) ​performance of the original contract by all of the parties.
• D) ​an accord and satisfaction.

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Definitions:

Accounts Receivable

Unsettled financial obligations to a corporation from its customers for products or services already delivered or engaged in, awaiting payment.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.

Just-in-time

An inventory strategy companies use to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

Restrictive Policy

Measures taken by a government or financial institution to limit borrowing and spending in an attempt to curb inflation or stabilize the economy.