Brian Is the Sole Proprietor Owner of Long Voyage Software

question 200

Multiple Choice

Brian is the sole proprietor owner of Long Voyage Software, which generates maps for wilderness trips.He started the business with an initial investment of $80, 000.A faulty map caused one customer to get hopelessly lost.After her rescue and recuperation, she sued Long Voyage for $5, 000, 000.Which of the following is true?

• A)The customer can be awarded only $80, 000--what the firm has available to pay.
• B)The customer can be awarded $5, 000, 000, but can get only $80, 000.
• C)The customer can be awarded $5, 000, 000, but Brian personally won't have to pay more than $80, 000.
• D)If $5, 000, 000 is awarded, Brian will have to pay none of it.
• E)If $5, 000, 000 is awarded, Brian is personally responsible for paying all of it.

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Definitions:

Retrospective Adjustment

Adjusting the financial statements of past periods to reflect the application of new accounting policies as if they had been applied all along.

Accounting Principle

Fundamental guidelines or rules that form the basis for financial accounting and reporting practices, aimed at ensuring consistency and comparability.

Comparative Financial Statements

Financial reports that show the financial position, performance, and cash flows of a company across different periods side by side for comparison.

Accounting Changes

Alterations or updates made to accounting methods, estimates, or reporting entity, which can impact the financial statements of a business.