​Which of the Following Statements Concerning Liquidated Damages Is NOT

question 17

Multiple Choice

​Which of the following statements concerning liquidated damages is NOT TRUE?

• A)​A liquidated damages clause will be enforced,if,when the contract was made,it was difficult to estimate actual damages.
• B)​The amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach.
• C)​Nominal damages are not the same thing as liquidated damages.
• D)​Liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party.

---

Definitions:

Absorption Costing

is an accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overhead) in the cost of a product.

Fixed Manufacturing Overhead

The set costs involved in the production process that do not change with the level of output, such as salaries and building leases.

Inventories

Items such as products, materials, and supplies held by a company for the purpose of resale or production.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and variable overhead) in the cost of goods sold, while fixed overhead costs are expensed in the period incurred.