When an Agent Is Interacting with a Third Party on Behalf

question 33

Multiple Choice

When an agent is interacting with a third party on behalf of a principal, the principal is said to be disclosed if:

• A) the agent is a general agent who has authority to transact all of the business of the principal.
• B) an agent and a third party interacts and the third party has no notice that the agent is acting for a principal.
• C) the third party with whom the agent interacts knows the agent is acting on behalf of a principal, and he or she knows who the principal is.
• D) an agent and a third party interacts and the third party has notice that the agent is acting for a principal but it does not know the principal's identity.

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Definitions:

Differential Cost

Differential cost, or incremental cost, is the difference in total cost that will result from selecting one option over another in decision-making.

Relevant Costs

Relevant costs are those costs that should be considered when making decisions. They are directly affected by the decision in question and can include future costs that will differ among alternatives.

Fixed Manufacturing Expenses

Costs that do not vary with the volume of production, such as rent, depreciation of manufacturing equipment, and salaries of permanent factory staff.

Selling and Administrative Expenses

Expenses incurred from selling products or services and managing the business, excluding production costs.