Implied authority: If an agent can reasonably expect to carry out a particular duty as part of an expressed authority, the agent also has implied authority.If, for example, Paul gives a customer a bid to remove a tree, the customer (a third party) will assume that Paul is authorized to perform the work. In this case, the agent has authority because the principal’s words or actions lead a third party to reasonably believe that the agent has authority to act. Apparent authority : Sometimes, the employer’s instructions are not precise and the worker must act based on apparent authority.When Joe tells Paul to take down a 20-foot tree at the Johnson’s residence, Paul has actual authority. In legal language, the principal’s words or actions cause the agent to reasonably believe that he or she is authorized to act. Actual authority : Workers are often given specific instructions about work that needs to be performed this defines actual authority.Therefore, you should invest the time to read these descriptions carefully during your exam study so that you can answer questions on agency topics. The REG test covers several types of authority, and these concepts can be confusing.
Just about everyone has dealt with this issue as an employee or contractor, even when you held a part-time job as a teenager. The next question is: What exactly is Paul authorized to do? As the agent, Paul is authorized to create a legal relationship with third parties so that tree service work can be performed. In legal terms, the principal gives consent and has capacity, meaning that Joe provides the vehicles and equipment so that Paul can do the work. Paul is the agent, Joe is the principal, and Paul has consent from Joe to perform tree service work. Let’s assume that Joe owns Reliable Tree Services and Paul is a foreman who manages a work crew. Simply put, an agent (worker) is authorized to do certain tasks for the principal (employer). Furthermore, you should know that an agent is authorized to act on behalf of a principal. If you’re had a business law course, you learned that agents and principals have a legal relationship. To address this issue, the REG test covers the concept of agency and the relationship between agents and principals. When CPAs move into management, they need to understand the rights and responsibilities of both full-time employees and independent contractors. Use these tips to successfully answer difficult questions on these content areas: Here are some broad financial accounting topics that make up a large percentage of questions on the REG section of the CPA exam. Consequently, you must know the material well so that you can answer quickly once you read the material. Completing your REG test in four hours can be challenging, because business law and income tax questions require you to read carefully. The CPA Exam includes four tests candidates have four hours to take each test.