Contracts for Sale May Contain Sections That Cause Implementation of the Contract

question 26

Multiple Choice

Contracts for sale may contain sections that cause implementation of the contract to depend on the successful completion of some prior action such as the buyer's ability to obtain financing on specified terms. This type of contract is commonly referred to as a(n) :

• A) contract assignment
• B) equitable title
• C) contract with contingencies
• D) uniform settlement statement

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Definitions:

Contra-Asset

An account that offsets or reduces the balance of a related asset account, such as accumulated depreciation.

Allowance for Doubtful Accounts

An estimation recorded on financial statements reflecting the amounts expected to be uncollected from accounts receivable.

Total Assets

The sum of all assets, both current and long-term, owned by a business, reported on a company's balance sheet.