If an Independent Contractor Enters into a Contract with a Third

question 79

Multiple Choice

If an independent contractor enters into a contract with a third party on behalf of the principal without express or implied authority from the principal to do so, who among the following is liable on the contract?

• A) the principal
• B) the independent contractor
• C) the third party
• D) both the principal and independent contractor

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Definitions:

Carrying Costs

Expenses incurred by a company for holding inventory over a period of time, including costs associated with warehousing and maintaining goods.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency.

Cash Cycle

The duration between the outlay of cash for purchasing inventory and the receipt of cash from customer sales, indicating liquidity.