When a Minor Avoids a Contract to Purchase a Car

question 28

Multiple Choice

When a minor avoids a contract to purchase a car:

• A) the parents of the minor are liable for the purchase price.
• B) a relative who cosigned the contract is liable for the purchase price.
• C) a friend to whom the minor loaned the car is liable for the purchase price.
• D) the automobile insurance company is liable for the purchase price.

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Definitions:

Retrospective Adjustment

A change made to the accounting records to correct an error or to apply a different accounting policy as if it had always been applied.

Net Impact

The overall effect of transactions or events on the financial position of a company, often considered in decision-making and reports.

Accounting Principle

Fundamental guidelines or rules that govern the accounting practices and financial reporting of companies.

Accounting Estimate

An approximation of a monetary amount in the absence of a precise means of measurement.