Fact Pattern 33-1B (Questions B14-B15 Apply)

question 20

Multiple Choice

Fact Pattern 33-1B (Questions B14-B15 apply)
Barney hires Clean Air, Inc., to install a new air conditioning system in his Dental Clinic, LLP. Barney does not have the right to control the details of Clean Air's performance.
-Refer to Fact Pattern 33-1B. The relationship be?tween Barney and Clean Air is

• A) client and independent contractor.
• B) employer and employee.
• C) master and servant.
• D) principal and agent.

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Definitions:

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but retained for reinvestment in the business or to pay off debt.

Convertible

A financial instrument, like a bond or preferred stock, that can be converted into another type of instrument, typically shares of the company's common stock.

Preferred Stock

An equity security that typically provides dividends before common stock is considered and may have priority over common stock in asset liquidation.

Common Stock

Common stock represents shares of ownership in a corporation, giving holders voting rights and a residual claim on corporate earnings in the form of dividends.