Which of the Following Is Not True Regarding a Credit

question 105

Multiple Choice

Which of the following is not true regarding a credit card expense?

• A)Credit card expense may be classified as a "discount" deducted from sales in the calculation of net sales.
• B)Credit card expense may be classified as a selling expense.
• C)Credit card expense may be classified as an administrative expense.
• D)Credit card expense is not recorded by the seller.
• E)Credit card expense is a fee the seller pays for services provided by the card company.

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Definitions:

Partially Disclosed Principal

A principal whose identity is not known by a third party, although the third party is aware that the agent is making an agreement on behalf of a principal. Also called unidentified principal.

Apparent Authority

A form of authority that a third party perceives to exist based on the principal’s behavior, even if no actual authority has been granted by the principal to the agent.

Agency Relationship

A legal arrangement in which one party, the agent, is authorized to act for another, the principal, in business transactions.

Principal

In finance, the original sum of money borrowed or invested, excluding any interest or profit. In legal contracts, the party who authorizes an agent to act on their behalf.