Fact Pattern 15-B3 (Questions B14-B15 Apply)

question 1

Multiple Choice

Fact Pattern 15-B3 (Questions B14-B15 apply)
In selling a commercial building,Birdie tells Colt that the property has a certain capacity,making it suitable for a nightclub.Birdie knows nothing about the capacity of the building,but it is not as she specifies.Colt buys the building.
-Refer to Fact Pattern 15-B3.On learning the truth,Colt confronts Birdie,who says she was not trying to fool him-she was only trying to make a sale.This is

• A)a mistake of value.
• B)a valid defense to a charge of fraud.
• C)negligent misrepresentation.
• D)unconscionable.

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Definitions:

Physical Inventory

A process involving the manual counting of all inventory items in a business at a specific point in time to verify quantities and condition.

Cost Flow Assumption

An accounting method used to value inventory and determine the cost of goods sold, examples include FIFO, LIFO, and weighted-average.

Tax Purposes

The specific reasons or objectives related to the calculation, payment, or management of taxes.

Cost Flow Assumption

Accounting assumptions used to calculate the cost of inventory sold and ending inventory value, such as FIFO, LIFO, or weighted average.