Which of the Following Is True Regarding an Agent's Liability

question 64

Multiple Choice

Which of the following is true regarding an agent's liability when a third party obtains a judgment against a previously undisclosed principal?

• A)The agent is freed from liability to the third party.
• B)The agent remains liable to the third party.
• C)The agent is freed from liability to the third party unless the principal refuses to pay.
• D)The agent is freed from liability to the third party unless the principal files for bankruptcy.
• E)The agent is freed from liability to the third party unless a contract for personal service was involved.

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Definitions:

Return On Sales

A ratio used to evaluate a company's operational efficiency, calculated by dividing operating profit by sales revenue.

Accrual Accounting

A financial recording approach that documents incomes and expenditures at the time they happen, irrespective of the actual cash flow.

Accrued Revenues

Income that has been earned but not yet received, recorded as an asset on the balance sheet to reflect sales that have taken place.

Liabilities

Financial obligations or debts that a company owes to others, which must be paid back in the future.