With Reference to the Two Characteristics of an Agency Relationship

question 40

Multiple Choice

With reference to the two characteristics of an agency relationship, the principal's right to control the agent and the fiduciary nature of the relationship, the relationship between a trustee and a beneficiary:

• A) is fiduciary in nature but lacks control.
• B) is subject to control but lacks the fiduciary nature.
• C) is subject to control and is fiduciary in nature.
• D) lacks both, the fiduciary nature as well as control.

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Definitions:

Adjusting Entry

An accounting entry made in the books at the end of an accounting period to allocate income and expenditure to the correct period.

General Ledger

A complete record of all financial transactions over the life of a company, used to compile financial statements.

Accounting Cycle

The complete process of collecting, recording, and processing financial transactions of a company, from when the transactions occur, to their representation in the financial statements.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made, used to prepare financial statements.