MrsJohnson Is Thinking of Selling Some Property to Her Son

question 94

Multiple Choice

Mrs.Johnson is thinking of selling some property to her son.Which of the following is correct with respect to intention when entering into such a contract?

• A)In domestic agreements,there is a presumption that there is no intention to be legally bound.
• B)Commercial contracts are always binding,no matter what the stated intention.
• C)When intention is the issue,there is never any presumption for or against intention; the courts will always apply the reasonable person test.
• D)Since domestic relationships are serious,there is a legal presumption that in such relationships there is an intention for the parties to be legally bound by their agreements.
• E)In commercial arrangements,there is always an intention to be bound by agreements no matter what the parties state to the contrary.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating its financial health over a specific period.

Lower-of-Cost-Or-Market

An accounting principle that dictates inventory should be recorded at either its historical cost or its current market price, whichever is lower.

Net Income

The amount of money that remains from revenues after all expenses, taxes, and costs have been subtracted; a crucial indicator of a company's profitability.