Which of the Following Is True of a Fully Disclosed

question 47

Multiple Choice

Which of the following is true of a fully disclosed agency?

• A) The third party does not know the identity of the principal.
• B) The third party knows the name of the principal, but all transactions are done with the agent.
• C) The contract is between the principal, agent, and the third party.
• D) The principal is liable on the contract with a third party.

---

Definitions:

Unearned Rent

Unearned rent is money received by a landlord for rent that has not yet been earned because the rental period has not occurred. It is recorded as a liability until the period passes.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period.

Depreciation Expense

A technique for spreading out the expense of a physical asset throughout its lifespan.

Fixed Asset

Long-term tangible assets held for business use and not expected to be converted to cash in the upcoming fiscal year, such as buildings, machinery, and equipment.