Jenson and Johnson Enter into a Contract That Involves Johnson

question 59

Multiple Choice

Jenson and Johnson enter into a contract that involves Johnson paying Jenson $1, 000 for shoveling the snow from his driveway throughout winter.Jenson, who was paid before work commenced, breached the contract on the very first day.He should refund $1, 000 to Johnson as ________.

• A)compensatory damages
• B)restitution
• C)liquidated damages
• D)consequential damages

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Definitions:

Adjusted Cost

The modification of the historical cost of an asset to reflect changes due to depreciation or amortization.

Goods Sold

The total quantity of products a company has sold during a particular period; it is closely related to "cost of goods sold" but focuses on the volume rather than the cost.

Work in Process

Inventory items that are partially completed, residing between raw material and finished goods stages in the production process.

Underapplied

Refers to the condition where the actual manufacturing overhead costs exceed the applied manufacturing overhead costs in accounting.