Reference - Lakeside Property

question 97

Multiple Choice

Reference - Lakeside Property. Ronnie agreed to act as the agent of Sue in finding a piece of lakeside property for her at a good price and also in obtaining a loan for her with which to purchase the property. She agreed to pay him $500 for doing so. To assist Ronnie in his duties, Sue disclosed to Ronnie confidential information about her finances and debts. Ronnie decided that he needed help and paid Rick $300 to look for property for Sue. Bruce told Ronnie about a great deal on a piece of lakeside property that Bruce had for sale. In fact, the deal was so good that Ronnie purchased the property for himself. When Sue found out about the property Ronnie bought for himself, she complained to Ronnie. He defended himself on the basis that he was not actually working for Sue when he found out about the deal. At the time, he was playing golf with Bruce. He also told Sue that he had hired Rick for $300 to assist him and that he could not be held liable because he had turned the job over to Rick. He asked Sue for reimbursement of that amount. Sue fired Ronnie threatening to sue him. Ronnie told Sue that he would counterclaim for the $300 owed to Rick. Only after he was fired, Ronnie disclosed to a number of parties information regarding Sue's spending habits which he thought were excessive. Which of the following is the most likely result if Sue sues Ronnie for purchasing the property from Bruce?

• A) Sue will lose because Ronnie had the right to act in his own best interest.
• B) Sue will lose but only because Ronnie was not involved in work duties when he heard about the property.
• C) Sue will lose because Ronnie had validly assigned all duties to Rick.
• D) Sue will win.
• E) Sue will win only if she can establish that she expressly told Ronnie that he could not assign the contractual duties under the contract.

Recognize the factors that influence the need for external financing.

Analyze the relationship between sales growth and asset requirements.

Identify the spontaneous and non-spontaneous sources of financing.

Interpret the impact of capital intensity and operational capacity on financial needs.

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Definitions:

Conversion Costs

Costs incurred to convert raw materials into finished products, typically comprising labor and overhead expenses.

Weighted-Average Method

An inventory costing method that averages the cost of all similar goods available during a period to determine the value of inventory.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, representing the costs necessary to convert raw materials into finished goods.

Weighted-Average Method

An inventory costing method that calculates cost of goods sold and ending inventory based on the average cost of all goods available for sale.