Which of the Following Is True If a Principal and an Agent

question 23

Multiple Choice

Which of the following is true if a principal and an agent have no agreement regarding the amount for which the principal will compensate the agent?

• A)A court will assume that the agent agreed to work on a gratuitous basis.
• B)The agent will be allowed to set the price that a court will enforce unless it is unconscionable.
• C)The principal will be allowed to set the price that a court will enforce unless it is unconscionable.
• D)A court will appoint a magistrate to set the price.
• E)A court will calculate compensation according to the customary fee in the situation.

---

Definitions:

Initial Value Method

A method of accounting for investments, where the investment is recorded at its original cost without recognizing subsequent changes in fair value.

Equipment Account

An account on the balance sheet representing the cost of equipment owned by a company, less any accumulated depreciation.

Voting Stock

Shares that give the holder the right to vote on company matters.

Book Value

The remaining value of a corporation's assets after subtracting its debts, as noted in the balance sheet.