Which of the Following Is True Regarding the Adequacy of Consideration

question 1

Multiple Choice

Which of the following is true regarding the adequacy of consideration?

• A) Courts generally consider the adequacy of consideration in determining whether to enforce a contract.
• B) Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value.
• C) Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value.
• D) Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value.
• E) Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors.

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Definitions:

Departmental Overhead Rate

A method to allocate overhead costs to specific departments based on certain criteria, such as machine hours or labor costs.

Direct Labor Hours

The total hours worked by employees directly involved in producing goods or services.

Assembling Department

A section within a manufacturing operation where various components are put together to form a finished product.

Activity-based Costing

A method of allocating overhead and indirect costs based on each product's or service's actual consumption of resources.