An Option Contract Is Created When the Offeree Gives the Offeror

question 36

True/False

An option contract is created when the offeree gives the offeror something of value in exchange for a promise not to revoke the offer for a stated period of time.

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Definitions:

Allowance Method

A technique in accounting used to adjust accounts receivable for the amount estimated to be uncollectible.

Bad Debts

Accounts receivable that are considered uncollectible, representing losses to the company.

Accounts Receivable Turnover

Accounts Receivable Turnover is a financial metric that measures how efficiently a company collects cash from its credit sales, calculated by dividing total credit sales by the average accounts receivable during a period.

Credit Policies

Guidelines established by businesses to determine to whom they will extend credit and on what terms.