An Agent Making a Proper Contract with a Third Person

question 28

Multiple Choice

An agent making a proper contract with a third person on behalf of a disclosed principal:

• A) has no personal liability on the contract.
• B) is liable only to the principal on the contract.
• C) is liable only to the third party on the contract.
• D) is personally liable to both the principal and the third person on the contract.

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and investments not considered cash equivalents.

Indirect Method

A cash flow statement preparation approach that adjusts net income for non-cash transactions and changes in working capital to calculate operating cash flow.

Comparative Balance Sheet

A financial statement that presents a company's assets, liabilities, and equity at two or more points in time, allowing for comparison and trend analysis.

Operating Activities

Operating activities include the primary revenue-generating activities of a business, as well as other activities that are not investing or financing activities, reflecting the company's core operations cash flow.