An Agent Who Makes a Contract for a Disclosed Principal

question 53

Multiple Choice

An agent who makes a contract for a disclosed principal whose contracts are voidable for lack of contractual capacity:

• A) is ordinarily personally liable to the third party if the principal avoids the contract.
• B) can be liable to the third party under certain circumstances.
• C) is never liable to the third party.
• D) is liable to the third party only if the agent warrants the principal has capacity.

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Definitions:

Classified Balance Sheet

A financial statement that groups assets, liabilities, and equity into subcategories, providing detail and clarity to financial positions.

Adjusted Trial Balance

A list of all ledger accounts and their final balances after adjustments have been made, used as the basis for preparing financial statements.

End-Of-Period Spreadsheet

A tool used in accounting to compile all account balances at the period's end, aiding in the preparation of financial statements.

Salaries Expense

The total amount paid to employees for services rendered over a specific period, recorded as an expense in financial accounting.