The Purpose of Damages in the Form of Monetary Compensation

question 86

Essay

The purpose of damages in the form of monetary compensation under a breach of contract action is to compensate the injured party for the losses suffered. Indicate two limitations on this principle.

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Definitions:

Credits

Accounting entries that increase liabilities or equity or decrease assets, representing the opposite of debits.

Owner Invests

occurs when the owner of a business contributes assets, commonly in the form of cash or equipment, into the business for its use.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment.

Revenue

Income generated from normal business operations and includes discounts and deductions for returned merchandise.