Which of the Following Correctly Characterize Principals and Agents in Important

question 330

Multiple Choice

Which of the following correctly characterize principals and agents in important examples of the principal-agent problem?

• A) In the doctor/patient relationship, the patient is the principal and the doctor is the agent.
• B) In the lawyer/client relationship, the client is the principal and the lawyer is the agent.
• C) Both of the above answers are correct.
• D) Neither of the above answers is correct.

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Definitions:

Unpaid Vouchers

Records of amounts owed for goods or services received but not yet paid for.

Voucher

A document that serves as evidence for a transaction and authorizes a payment.

Purchase Requisition

An internal document used by an organization to request permission for a purchase before initiating the actual procurement process.

Purchase Order

A formal document sent from a buyer to a seller, requesting the purchase of goods or services, outlining quantities and prices.