Identify the True Statement Concerning the Law of Principal and Agent

question 191

Multiple Choice

Identify the true statement concerning the law of principal and agent.

• A) Agency is only created by way of a contract.
• B) The principal and his agent owe each other the same duties.
• C) An agent who puts himself in a position where his interests conflict with those of his principal is in breach of his duties even though no actual harm comes to his principal.
• D) An agent with no express authority can never bind his principal into a contract with a third party.
• E) An agent can never be liable to the third party himself while the principal will bear no such liability.

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Definitions:

Initial Value Method

The procedure of accounting for an investment at its cost at the time of purchase without subsequent adjustment for changes in market value.

Dividends

Payments made to shareholders out of a corporation's profits as a return on their investment.

Consolidated Net Income

The total profit of a parent company and its subsidiaries after taxes and interest, reflecting the group's overall financial performance.

Initial Value Method

A financial accounting approach for investments where the investment is recorded at its acquisition cost without subsequent adjustment for changes in market value.