Multiple Choice
Which type of accounting report would best help a company analyze available options for decision-making, and how should it be organized?
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1. Introduction to Accounting
Types of Accounting
Multiple Choice
An agency relationship may be involuntarily terminated by which of the following?
A
Death of either the principal or the agent
B
Expiration of a specified time period
C
Mutual agreement between principal and agent
D
Completion of the agency's purpose
Verified step by step guidance1
Understand the concept of an agency relationship: An agency relationship is a legal arrangement where one party (the agent) acts on behalf of another party (the principal). This relationship can be terminated under certain conditions.
Review the conditions for termination of an agency relationship: These include involuntary termination (e.g., death of either party), expiration of a specified time period, mutual agreement, or completion of the agency's purpose.
Focus on involuntary termination: Involuntary termination occurs when circumstances beyond the control of the principal or agent end the relationship, such as the death of either party.
Analyze the other options: Expiration of a specified time period, mutual agreement, and completion of the agency's purpose are voluntary or natural terminations, not involuntary ones.
Conclude that the correct answer for involuntary termination is 'Death of either the principal or the agent,' as this is beyond the control of both parties and ends the agency relationship immediately.
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