Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Useful Information

Financial Accounting

1. Introduction to Accounting

Useful Information

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Multiple Choice

Under which circumstance is an agent permitted to use their draft authority to issue a check or draft on behalf of the principal?

Only after receiving written approval from a financial institution

Only when acting within the scope of authority granted by the principal

Whenever the agent deems it necessary, regardless of principal's instructions

Whenever the agent is acting in their own personal interest

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Verified step by step guidance

Understand the concept of 'draft authority': Draft authority refers to the permission granted to an agent to issue checks or drafts on behalf of the principal. This authority is typically limited to specific circumstances outlined by the principal.

Identify the scope of authority: The agent can only act within the scope of authority explicitly granted by the principal. This means the principal must provide clear instructions or guidelines regarding when and how the agent can use draft authority.

Eliminate incorrect options: Review the options provided. For example, 'Whenever the agent deems it necessary' and 'Whenever the agent is acting in their own personal interest' are incorrect because they disregard the principal's instructions and authority.

Focus on the correct condition: The correct condition is 'Only when acting within the scope of authority granted by the principal.' This ensures the agent is acting in alignment with the principal's intentions and legal boundaries.

Apply this understanding to similar scenarios: In financial accounting, agents must always act within the authority granted by the principal to avoid legal or ethical violations. This principle is crucial for maintaining trust and accountability in financial transactions.