Contractors Service, Inc

question 48

Multiple Choice

Contractors Service, Inc., enters into a contract to build a restaurant for Dierdre's Soup Spoons Bistro with Dierdre's payment due on August 1. On August 1, her bank is closed, and for this reason, she claims that she cannot pay on time. In this situation

• A) ​Dierdre's bank is liable to Contractors Service.
• B) ​Dierdre is in breach of contract.
• C) ​the contract is discharged.
• D) ​the contract is suspended.

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Definitions:

Initial Recognition

The process of recording an asset or liability in the financial statements at the time it is incurred or acquired.

Measurement Basis

The method or approach used in accounting to determine the value at which assets, liabilities, income, and expenses are recorded in the financial statements.

Cost

The value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore.

Revaluation

An adjustment of the value of an asset to reflect its current market value rather than its cost value.