Lou and Mira Want to Rescind Their Contract Under Which

question 67

Multiple Choice

Lou and Mira want to rescind their contract under which Lou sold an MP3 player to Mira for $50. To rescind the contract

• A) Lou must return the $50 and Mira must return the player.
• B) Lou must return the $50 only.
• C) Mira must return the player only.
• D) the parties can keep the "benefits" of their bargain.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Net Purchases

The total amount spent on purchases of goods for resale after subtracting any purchase returns, allowances, and discounts.

Operating Expenses

Costs associated with running a business's day-to-day operations, excluding the cost of goods sold.

Income Summary

An account in which revenues and expenses are summarized, used in the closing process to prepare the accounts for the next period.