Which of the Following Is True of Off-Balance-Sheet Activities

question 177

Multiple Choice

Which of the following is true of off-balance-sheet activities?

• A)They involve generation of fees without exposure to any risk.
• B)They include contingent activities recorded in the current balance sheet.
• C)They invite regulatory costs and additional "taxes."
• D)They have both risk-reducing as well as risk-increasing attributes.

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Definitions:

Apparent Authority

The appearance or assumption of authority based on the actions or statements of the principle, leading a third party to believe that an agent has the authority to act.

Sole Proprietorship

A Sole Proprietorship is a type of business entity that is owned and run by one individual, with no distinction between the business and the owner, making the owner personally liable for the debts of the business.

Legal Person

An individual or organization capable of bearing legal rights and obligations, including the ability to enter into contracts and sue or be sued.

Corporation

A legal entity recognized by law as a separate entity from its owners, providing limited liability but allowing it to enter into contracts, sue, and be sued.