If a Third Party Comes to Know of an Undisclosed

question 45

Multiple Choice

If a third party comes to know of an undisclosed principal's identity and obtains a judgment against the principal,which of the following is true?

• A)The agent is released from liability to the third party unless the principal resides in another state and has not paid the judgment within 30 days from when it was rendered.
• B)The agent remains liable to the third party.
• C)The agent is released from liability to the third party.
• D)The agent remains liable to the third party unless the dispute involves an amount less than $1,000 in which case the agent is released.
• E)The agent remains liable to the third party unless the dispute involves an amount less than $500 in which case the agent is released.

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Definitions:

Periodic Inventory System

An inventory system that updates inventory records at specific intervals, requiring physical counts to determine cost of goods sold.

Purchases

Acquisition of goods or services in exchange for money, usually considered in the context of inventory or supplies for a business.

General Journal

An accounting ledger that records all types of transactions before they are transferred to specific accounts in the general ledger.

Gross Method

An accounting practice for recording purchases with a discount, where the purchase is initially recorded at gross amount with the potential discount noted separately.