Within the Context of Restrictive Covenants, Which of the Following

question 48

Multiple Choice

Within the context of restrictive covenants, which of the following statements is TRUE?

• A)Judicial enforcement depends primarily on three factors, one of which asks whether the employer has a proprietary interest worthy of protection.
• B)A non-competition clause prohibits the employee from soliciting the customers of the employer, but otherwise leaves the employee free to compete.
• C)Because of the importance of freedom of contract, all restrictive covenants are presumed to be void.
• D)A non-solicitation restricts an employee's ability to work for a competitor or to start a business that would compete with the employer.
• E)The courts adopt the same attitude toward both non-competition clauses and non-solicitation clauses.

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Definitions:

Bad Debts Expense

The cost associated with accounts receivable that a company cannot collect and thus writes off as a loss.

Allowance for Doubtful Accounts

A valuation account used to estimate the portion of a company's accounts receivable that may not be collectible.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus any costs related to the sale or completion of goods.

Specific Write-off

The action of recognizing that a specific asset, often an account receivable, has become uncollectible and removing its value from the books.