Christine Entered into a Contract with Vernon

question 68

Multiple Choice

Christine entered into a contract with Vernon. She was required to pay $5000 and he was to provide advice regarding a business venture that she was pursuing. If Vernon had performed properly, Christine would have earned a profit of $20 000. As a result of Vernon's careless performance, however, Christine suffered a loss of $10 000 (in addition to the $5000 that she had paid to Vernon) . Christine wants to sue Vernon in both contract and tort. Which of the following statements is TRUE?

• A) Christine will receive damages of $5000 if her claim in tort is successful.
• B) s the terms were explained in the text, Vernon owed a primary obligation to Christine in both tort and contract.
• C) As the terms were explained in the text, Vernon owed a primary obligation in contract and a secondary obligation in tort, at the moment before her acted carelessly.
• D) Christine will receive damages of $20 000 if her claim in tort is successful.
• E) Christine must choose between tort and contract, and cannot sue for both at the same time.

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Definitions:

Accounting Time Period

The span of time covered by financial statements, typically a fiscal quarter or year, during which all financial transactions are recorded and reported.

Quarter

A three-month period on the financial calendar that acts as a basis for periodic financial reporting and dividends.

Post-Closing Trial Balance

A summary of all accounts after closing entries are made, used to check the accuracy of closing entries and the balance of permanent accounts.

Adjusted Trial Balance

A list of all accounts and their final balances after all end-of-period adjusting entries have been made, used to prepare financial statements.