Contracts That Are Drafted So That One Person's Obligations Under

question 28

Multiple Choice

Contracts that are drafted so that one person's obligations under the contract do not arise until the happening of a certain event are called ________ contracts.

• A)Preventable
• B)Convertible
• C)Conditional
• D)Invalid
• E)Temporary

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Definitions:

Realization

The process of converting non-cash assets into cash or recognizing revenue when it is earned and measurable, regardless of when cash is received.

Partnership Termination

The process of dissolving the business relationship between partners under the terms of a partnership agreement.

Income-Sharing Ratios

Ratios that determine how profits or losses are divided among business partners or stakeholders according to agreed terms.

Capital Balance

The portion of equity attributable to the owners or shareholders in the company, reflecting the initial and additional contributions plus retained earnings minus withdrawals.