Which One of the Following Is False with Regard to Exemption

question 104

Multiple Choice

Which one of the following is false with regard to exemption (exclusion) clauses?

• A) Even if there is an exemption clause in the contract, the court can hold that the exemption clause is of no effect if the breach is a "fundamental breach."
• B) Where there is an exemption clause in a contract, the court will strictly construe that clause; i.e., the wording of the clause must cover the situation that occurred.
• C) To be part of the contract, such clauses must be brought to the attention of the parties before or at the time of contract.
• D) An effective exemption clause is a barrier blocking the party wronged from his or her remedy, e.g., from damages.
• E) Such clauses are prohibited in any sale of goods contract.

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Definitions:

Statement of Income

A report detailing the earnings, expenses, and net profit of a business over a fiscal period, illustrating the financial performance.

Zero Balance

A situation where an account's balance is exactly zero, indicating no funds or no outstanding amount.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for revenues earned, expenses incurred, and depreciation, ensuring the total debits equal the total credits before financial statements are prepared.

Adjusting Entries

are journal entries made at the end of an accounting period to adjust income and expense accounts so that they comply with the accrual concept of accounting.