Exam BEC Topic 1 Question 482 Discussion
Actual exam question for AICPA's BEC exam
Question #: 482
Topic #: 1
Question #: 482
Topic #: 1
Acorn and Bean were general partners in a farm machinery business. Acorn contracted, on behalf of the
partnership, to purchase 10 tractors from Cobb Corp. Unknown to Cobb, Acorn was not authorized by the
partnership agreement to make such contracts. Bean refused to allow the partnership to accept delivery
of the tractors and Cobb sought to enforce the contract. Cobb will:
partnership, to purchase 10 tractors from Cobb Corp. Unknown to Cobb, Acorn was not authorized by the
partnership agreement to make such contracts. Bean refused to allow the partnership to accept delivery
of the tractors and Cobb sought to enforce the contract. Cobb will:
Suggested Answer: C Vote an answer
Choice "c" is correct. A general partner has apparent authority to bind the partnership and other partners
in respect to all ordinary transactions within the apparent scope of the partnership business. A farm
machinery business probably regularly purchases tractors. Thus, there was apparent authority here.
Choices "a" and "b" are incorrect. Implied authority is authority that an agent reasonably believes he or
she was given by the principal along with any express authority. Because Acorn knew that he did not have
express authority to make the contracts here, he could not reasonably believe that he had implied
authority to do so. Choice "d" is incorrect. The seller was not aware of Acorn's lack of express authority.
Therefore, Cobb relied on Acorn's apparent authority.
in respect to all ordinary transactions within the apparent scope of the partnership business. A farm
machinery business probably regularly purchases tractors. Thus, there was apparent authority here.
Choices "a" and "b" are incorrect. Implied authority is authority that an agent reasonably believes he or
she was given by the principal along with any express authority. Because Acorn knew that he did not have
express authority to make the contracts here, he could not reasonably believe that he had implied
authority to do so. Choice "d" is incorrect. The seller was not aware of Acorn's lack of express authority.
Therefore, Cobb relied on Acorn's apparent authority.
by Algernon at Nov 06, 2025, 04:32 AM
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