A Contract Between Computers, Inc

question 77

Multiple Choice

A contract between Computers, Inc., and Digital Corporation contains a clause stating that any assignment is "void." This effectively prohibits

• A) any assignment.
• B) no assignment.
• C) only an assignment that does not include payment of consideration.
• D) only an assignment that would increase the risk of nonperformance.

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Definitions:

Sequential Method

A cost allocation method where support departments' costs are allocated to production departments in a specific order, that somewhat reflects the level of services provided among support departments.

Support Departments

Units within an organization that provide essential services or support to the operational departments but do not directly participate in the primary activity of the business.

Proportional Usage

The allocation of costs, resources, or time in direct relation to the amount of goods or services produced or consumed.

Direct Method

An accounting practice in cash flow statement preparation where actual cash flows from operating activities are listed, as opposed to the indirect method.