Which of the Following Would a Law Professor Most Likely

question 56

Multiple Choice

Which of the following would a law professor most likely indicate as being representative of the policy rationale with regard to the remoteness test?

• A) to compensate the appropriate party for decreased risk
• B) to encourage the purchase of liability insurance coverage
• C) to avoid unlimited liability for consequences of breach
• D) to prevent one party from turning down the prospective job

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Definitions:

Prior Period Adjustment

A correction of errors in financial statements that were made in previous periods, affecting retained earnings on the balance sheet.

Financial Statements

Official records that detail the financial activities and condition of a business, including income statement, balance sheet, and cash flow statement.

Retained Earnings

The portion of a business’s profits not distributed to shareholders, instead reinvested in the business or kept for reserve.

Cash Dividends

Payments made by a corporation to its shareholder members in the form of cash.