Section 2: 15–25%R5
Agency
Exam insight
Agency answers who is bound and who is liable when one person acts for another, a recurring REG theme. The exam keeps coming back to two lines: actual vs. apparent authority, and employee vs. independent contractor.
What AICPA wants you to know
- 1Explain how an agency relationship is created
- 2List the duties the agent owes the principal and the duties the principal owes the agent
- 3Distinguish actual (express and implied), apparent authority, and ratification
- 4Determine principal and agent liability to third parties under disclosed, partially disclosed, and undisclosed principals
- 5Apply respondeat superior and the employee vs. independent-contractor distinction
- 6Identify the methods by which an agency terminates
Patterns in this topic
The exam re-skins the same archetypes. Recognize these here, then drill them in the Pattern Lab.
Exam tip
Study smarter: before you expand each card, cover the screen and try to recall what the concept means from its title alone. Retrieving it from memory builds the recall the exam actually tests, and it beats re-reading.