Phil Enters into a Contract with Vacation Resorts,Inc

question 16

Multiple Choice

Phil enters into a contract with Vacation Resorts,Inc.,to work as a chef.Under the plain meaning rule,the meaning of this contract must be determined by reference to

• A)any available evidence.
• B)any relevant extrinsic evidence.
• C)the face of the instrument.
• D)the later testimony of the parties.

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Definitions:

Gross Profit

The financial gain obtained after deducting the cost of goods sold from total sales revenue.

Intra-entity Inventory

Inventory transactions occurring between divisions or subsidiaries within the same parent company, which may need elimination during consolidation.

Goodwill

The excess of the purchase price of a business over the fair market value of its identifiable assets and liabilities, recognized as an intangible asset on the balance sheet.

Equity Method

An accounting technique used to record an investor's proportional share of an associate company's net income or loss on its financial statements.