Northwest Is a Micro-Brewery

question 103

Multiple Choice

Northwest is a micro-brewery. It orders bottles from M that must have crests inscribed on the bottles. To be sure the bottles meet specifications, Northwest hires someone to check them as they were produced at M. With respect to the expenses of hiring the inspector:

• A) Northwest pays the expenses but may recover them if the bottles do not conform
• B) Northwest must pay the expenses under any circumstances
• C) M must pay the expenses because the bottles are a unique item
• D) M must pay the expenses since Northwest is not liable for any expenses until the bottles are accepted
• E) none of the other choices

---

Definitions:

Reasonably Possible

A term used in accounting and legal contexts to describe outcomes that are more than remote but less than likely.

Liability Likelihood

The probability or likelihood that a company will be responsible for an obligation or debt in the future.

Reasonably Possible

A term used in accounting and finance to denote outcomes that are more than a remote possibility but less likely than probable.

Estimable

Capable of being estimated or approximately calculated.