A Rock Group Assigns Its Payment Under a Performance Contract

question 20

Multiple Choice

A rock group assigns its payment under a performance contract to the Costume Shop,a business that has supplied the group with outrageous stage outfits,and to which the group owes a great sum of money.This is a(n)

• A)valid assignment because of the rule of freedom to contract.
• B)valid assignment because this is a simple transfer of the right to receive money.
• C)invalid assignment because it increases the burden of the payor.
• D)invalid assignment because this is a personal service contract.

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Definitions:

Control Environment

The overall attitude of management and employees about the importance of controls.

Internal Control Structure

The mechanisms, policies, and procedures implemented by a company to safeguard its assets, enhance the reliability of its accounting records, and increase efficiency and compliance with laws and regulations.

Management

The process of directing and controlling a group or organization to achieve specific goals or objectives efficiently and effectively.

Cash Short and Over

An account that records discrepancies between actual cash received and the expected amount, often due to errors or theft.