What Type of Contractual Clause in a Sales Contract with a Buyer

question 5

Multiple Choice

What type of contractual clause in a sales contract with a buyer provides a provision such that the seller is obligated to extend the same price terms to the buyer that it extends to other customers?

• A)Indemnification clause
• B)Most favored customer clause (MFCC)
• C)Escape clause
• D)Money back guarantee
• E)Meet the competition clause (MCC)

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Definitions:

Bad Debts Expense

Bad debts expense represents the amount of receivables a company estimates it will not be able to collect from customers over a period.

Aging of Receivable Method

An accounting technique used to estimate bad debts by analyzing accounts receivable based on the length of time they have been outstanding.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of receivables a company does not expect to actually collect.

Bad Debts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect due to customer defaults.