Due to Criticism That the Proximate Cause Rule Is Difficult

question 257

Multiple Choice

Due to criticism that the proximate cause rule is difficult to understand and apply, some states have replaced it with the:

• A) fault factor test
• B) considerable factor test
• C) substantial factor test
• D) ultimate cause rule
• E) none of the other choices

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Definitions:

Net Realizable Value

The estimated selling price of goods, minus the costs of their completion and costs necessary to make the sale.

Market Value

Market value is the current price at which an asset or service can be bought or sold in a marketplace.

Ending Inventory

The total value of all merchandise or goods held by a company at the end of an accounting period, which has not been sold.

Allowance Method

An accounting technique used to account for bad debts, where companies estimate uncollectible accounts receivable and record them as an allowance for doubtful accounts.