Which of the Following Is True Regarding an Agent Who

question 37

Multiple Choice

Which of the following is true regarding an agent who is acting for an undisclosed principal?

• A) The agent will bind both himself and the principal on most contracts.
• B) The third party will never be bound in a contract with the principal.
• C) An undisclosed principal will bind only himself and not the agent.
• D) Failure to disclose the name of the principal is a form of fraud.

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Definitions:

Stock Investments

Purchases of shares in other companies, held as assets, which represent partial ownership and may yield dividends and capital gains.

Subsidiary Ledger

A detailed ledger that contains all the transaction details of a specific account, which then summarizes into the general ledger.

Long-term Liability

Financial obligations that are due after a period of more than one year, such as bonds payable or long-term loans.

Cost Method

An accounting method used to value inventory or investments, where the cost of the goods or the investment purchase price is the basis for the value on the balance sheet.