Why Is the Distinction Between Employment and an Independent Contract

question 3

Multiple Choice

Why is the distinction between employment and an independent contract important?

• A) An independent contractor cannot be sure that he will be paid.
• B) An employee has the right to wages.
• C) An employee can bind the employer in a contract he enters into on behalf of the employer.
• D) An employer may be held responsible for torts committed by the employee.
• E) Employees can withdraw their services.

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Definitions:

Cash Payments

Outflows of cash to settle obligations or purchase goods and services.

Voucher

A written authorization or proof of transaction that details the terms and conditions of a financial exchange or payment.

Liability

A financial obligation or amount owed by a business or individual to another entity.

Account Receivable

Funds that customers owe to a business for products or services they have received but have not paid for.