A Promoter

question 16

Multiple Choice

A promoter:

• A)may have liability on the contracts he negotiates on behalf of the prospective corporation.
• B)does not hold any liability to third parties on preincorporation contracts.
• C)automatically becomes one of the initial directors of the corporation.
• D)is not liable on a preincorporation contract after the corporation's adoption of the contract.

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Definitions:

Percentage Of Credit Sales

A method used to estimate bad debts expense, based on the percentage of sales made on credit that are expected to be uncollectible.

Allowance Method

An accounting technique used to estimate and account for bad debts, acknowledging that a certain percentage of sales or receivables may not be collected.

Direct-write Off Method

An accounting technique where uncollectible accounts receivable are written off directly against income at the time they are deemed nonrecoverable.

Material Impact

This term describes a significant effect or influence that certain actions or events can have on the financial health or operational outcomes of a business or project.