Which of the Following Statements Is True Regarding an Agent

question 22

Multiple Choice

Which of the following statements is true regarding an agent?

• A) An agent must have capacity to contract.
• B) An agency relationship is always created by the words or actions (or lack of action) of the agent.
• C) An agent may not act contrary to or without the principal's consent.
• D) The fact that a person acts on behalf of another makes him an agent even without the appointment by the principal.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in the asset's value over time.

Cash Commitments

Obligations to pay out cash in the future for contracts or other agreed upon transactions.

Compensating Balance

A minimum bank account balance that a borrower agrees to maintain as a condition for borrowing from a lender.

Minimum Cash Balance

The least amount of cash a company aims to hold in its accounts to meet immediate transaction demands.