Which of the Following Is NOT an Example of an Entity

question 26

Multiple Choice

Which of the following is NOT an example of an entity retaining significant risks and rewards of ownership?

• A) The entity retains an obligation for unsatisfactory performance not covered by normal warranty provisions.
• B) The receipt of revenue from a particular sale is contingent on the buyer reselling the goods.
• C) The goods are shipped subject to installation, and the installation is a significant part of the contract that has not yet been completed by the entity.
• D) The buyer has the right to rescind the purchase for a reason specified in the sales contract. The entity is confident that this option will not be exercised.

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Definitions:

Restrictive Covenant

A clause in a contract or deed limiting what the owner of the property can do with it.

Injunction

A court order requiring an individual or entity to do or cease doing a specific action.

Competing Business

A business that offers the same or similar products or services as another business, thereby competing for the same market share.

Unconscionable

Referring to an agreement or contract that is so unfairly one-sided that it is considered oppressive or shocking to the moral conscience.