CPA LogoCPA Exam Prep

Agency Relationships

What Is an Agency?

An agency relationship exists when one person, called the agent, is authorized to act on behalf of another person, called the principal. Actions taken by an authorized agent may legally bind the principal in dealings with third parties.

Tip
An agent represents the principal's interests, not personal interests, while performing authorized duties.
Summary
Agency enables businesses to operate efficiently by allowing others to act on their behalf.