MrSnarey Devised and Conducted a Fraudulent Scheme While Working as an Agent

question 86

Multiple Choice

Mr.Snarey devised and conducted a fraudulent scheme while working as an agent of Mutual Life.What would the likely result be?

• A)Neither the agent nor the company could be liable,because Snarey was only an agent,and the company had no actual knowledge.
• B)Only the agent was liable,because the action taken was dishonest and therefore outside the scope of the agency relationship.
• C)Since Snarey was an agent with authority to enter into this general type of transaction,the company was vicariously liable for his conduct.
• D)The company could be liable only if it were shown Snarey was an employee acting under the direction of a superior.
• E)The doctrine of caveat emptor was applied.

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Definitions:

Cash Flows

The entire volume of cash transactions happening within a business, notably affecting its financial flexibility.

Accurate Accounting

The practice of precisely recording, summarizing, and reporting financial transactions.

Accruals

Accounting practices that record revenues and expenses when they are incurred, regardless of when cash is exchanged.

Depreciation

An expense recorded to reduce the book value of an asset due to its usage and wear and tear over time, reflecting its decreasing value.