Forbearance to Assert a Claim Is Binding Consideration

question 16

Multiple Choice

Forbearance to assert a claim is binding consideration:

• A) only if the claim has legal merit.
• B) regardless of whether the claim has merit, and regardless of whether the claim has been asserted in good faith.
• C) only if the claim has legal merit and has been asserted in good faith.
• D) when the claim, regardless of whether it has legal merit, has been asserted in good faith.

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Definitions:

Notes Payable

A written promise to pay a specific sum of money to a person or entity at a future date, categorized as a liability on the balance sheet.

Accrued Interest Payable

Interest that has been incurred but not yet paid, typically appearing on the balance sheet as a liability.

Next Period

Refers to the forthcoming time frame in accounting or business planning, usually the next month, quarter, or fiscal year.

Interest Recognize

The accounting practice of recording interest earned or incurred in the period it is applicable, regardless of when it is paid.