Explain the Principle of Indemnity

question 7

Essay

Explain the principle of indemnity. How does one measure indemnity?

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Definitions:

Notes Payable

Written agreements where a borrower agrees to pay back a specified sum of money to a lender at a future date, typically with interest.

Sales Taxes Payable

Liabilities owed to local, state, or federal tax authorities from sales made, collected by the company from customers at the time of sale.

Interest Charged

Interest charged refers to the cost of borrowing money, usually expressed as a percentage of the principal loan amount to be paid over a specific period.

Sales Taxes Payable

Liabilities accounted for the sales tax collected from customers on taxable transactions, which are due to be paid to the relevant tax authorities.