In Deciding Whether Consideration Necessary to Form a Contract Exists,a

question 50

Multiple Choice

In deciding whether consideration necessary to form a contract exists,a court must determine whether:

• A) the consideration given by each party is of roughly equal value.
• B) the consideration conforms to the subjective intent of the parties.
• C) the consideration has sufficient monetary value.
• D) there is mutuality of consideration.

---

Definitions:

Costs Incurred

Represents the expenses that a company or individual has realized in the process of conducting business or carrying out a specific activity.

Obligations

Financial or legal responsibilities, such as debts or contractual agreements, that an entity is required to fulfill.

Deposit Method

An accounting method used for recognizing revenue and expenses related to long-term contracts where the earnings process is incomplete.

Revenue Recognition

The accounting principle that outlines the specific conditions under which revenue is recognized or recorded.