What Were Martha,Greg,and Prudence Seeking by Requesting a Novation in Regards

question 37

Multiple Choice

What were Martha,Greg,and Prudence seeking by requesting a novation in regards to the lawsuit threatened by Belinda?

• A) An agreement by which the corporation would be substituted as the debtor instead of Martha, Greg, and Prudence so long as the corporation made a profit in its first year of existence.
• B) An agreement by which Martha, Greg, and Prudence would be discharged from the debt so long as the new corporation agreed to do an agreed upon amount of business with Belinda for a certain period.
• C) An agreement by which Martha, Greg, Prudence, Belinda, and the corporation would agree that the corporation would be liable to Belinda, and that Martha, Greg, and Prudence would be released.
• D) An agreement by which Martha, Greg, Prudence, Belinda, and the corporation would agree that the company would be liable to Belinda for one half the debt and that Martha, Greg, and Prudence would be liable for only one half of the debt.
• E) An agreement by which Belinda agreed to delay her claim for one year in order to give the corporation a chance to make a profit.

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Definitions:

Net Income

The net income of a company, which is calculated by deducting all costs and taxes from the total revenue.

Incidental Costs

Minor or secondary costs that are associated with purchasing or manufacturing a product but not directly allocable to production costs.

Merchandise Inventory

Goods available for sale to customers, categorized as a current asset on a company's balance sheet.

Invoice Cost

The price of goods or services listed on an invoice, typically inclusive of fees and charges before any discounts.