When Agents Make Advances from Their Own Funds in Conducting

question 27

Multiple Choice

When agents make advances from their own funds in conducting the principal's business, the principal has:

• A) no duty to reimburse the agent because the agent has assumed the burden.
• B) a duty to reimburse the agent for expenses incurred for the principal.
• C) a duty to reimburse the agent even if the agent is not acting within the scope of his/her authority.
• D) no duty to reimburse the agent because the agent commingled fungible goods.

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Definitions:

Direct Materials

Raw materials that are directly incorporated into a finished product and can be directly allocated to that product.

Abnormal Spoilage

Waste or defects in the manufacturing process that exceed the normal or expected rate of spoilage, often resulting in additional costs for a company.

Normal Spoilage

The expected amount of waste or loss of materials during a manufacturing process that is considered an unavoidable cost of production.

Operation Costing

A hybrid costing system used in manufacturing goods that combines both job costing and process costing methods.