In the Relationship Between the Owner of a Bakery and the Baker

question 83

Multiple Choice

In the relationship between the owner of a bakery and the baker, the owner is

• A)an agent, as is the baker.
• B)an agent and the baker is a principal.
• C)a principal and the baker is an agent.
• D)a principal, as is the baker.
• E)neither a principal nor an agent, but the baker is an agent.

---

Definitions:

Maximum Cost

The highest possible expense that can be incurred for a specific activity, project, or purchase.

Method

A systematic way of accomplishing something. In a financial context, this could refer to a specific approach or procedure adopted for accounting or analysis purposes.

Average Rate of Return Method

A method of evaluating capital investments by calculating the average annual profit expected from the investment and dividing it by the initial investment cost.

Present Value

The contemporary valuation of a future money sum or cash flow series, based on a predetermined return rate.