Under the UCC, Which of the Following Is True If

question 15

Multiple Choice

Under the UCC, which of the following is true if goods are identified at the time the parties entered into a contract and these goods are partially destroyed through no fault of the parties before risk passes to the buyer or lessee?

• A) The contract is void.
• B) The buyer may inspect the goods and decide whether to (1) treat the contract as void or (2) ask the seller for a reduction of the contract price and then accept the damaged goods.
• C) The seller may inspect the goods and decide whether to (1) treat the contract as void or (2) offer the buyer a reduction of the contract price for the damaged goods.
• D) Unless the parties can agree on a price, the matter must be submitted to arbitration for a determination as to an appropriate price.
• E) Unless the parties can agree on a price, the contract is voidable at the option of the seller.

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Definitions:

Ending Inventory

Merchandise value ready for sale at the close of an accounting cycle.

Consistency Principle

An accounting standard that mandates entities to apply the same accounting methods and practices from period to period.

Expense Recognition Principle

This principle dictates that expenses should be recognized in the accounting period when they are incurred, not necessarily when they are paid, matching expenses to the revenues they help generate.

Physical Flow Assumption

An accounting method that tracks the physical movement of goods in inventory, often used to calculate cost of goods sold or ending inventory.