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An Agency Relationship Exists When One or More Persons (The

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An agency relationship exists when one or more persons (the principal or principals) hire another person or persons (the agent or agents) as decision-making specialists to perform a service.


Definitions:

Purchase Discounts

Reductions in price given by suppliers for early payment or bulk purchasing.

Controlling Account

A general ledger account that summarizes the total balances of several subsidiary accounts.

Accounts Payable

Liabilities to suppliers or creditors for items or services purchased on credit.

Merchandise Inventory

The total cost of all the goods owned by a company that are intended for sale, during a particular accounting period.

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