A Principal Whose Identity Is Known by a Third Party

question 25

True/False

A principal whose identity is known by a third party with whom an agent contracts on the principal's behalf is a disclosed principal.

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Definitions:

Permanent/Temporary

Classification of accounts where permanent accounts (real accounts) represent ongoing items that are not closed at the end of the accounting period, whereas temporary accounts (nominal accounts) are closed.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal, ensuring accuracy of the figures.

Post-closing Trial Balance

The trial balance prepared after closing entries have been posted to ensure that debits and credits still balance, marking the end of an accounting period.

Normal Balance

The side of an account (debit or credit) that is expected to increase; for assets and expenses, it’s debit; for liabilities, equity, and revenue, it's credit.