What term refers to a person who, under the law, owes a duty of loyalty to a principal or investor?

What term refers to a person who, under the law, owes a duty of loyalty to a principal or investor?

• A. Agent (re: Conflict of Interest)
• B. Draw Request
• C. Non-Competition Agreement
• D. Matching Principle under GAAP

Answer: (A)

In business law and accounting, a person who owes loyalty to a principal or investor is the agent. When someone acts on behalf of another person or entity, they’re in a principal–agent relationship, and the agent has a fiduciary duty to the principal. That means the agent must act in the principal’s best interests, avoid conflicts of interest, and disclose any potential conflicts. This duty of loyalty is precisely what the term describes in the context of the question. The other options don’t describe a person with this loyalty obligation: a draw request is just a form to request funds, a non-competition agreement is a contract restricting future activity, and the matching principle under GAAP is an accounting rule about timing of revenue and expense recognition.

In business law and accounting, a person who owes loyalty to a principal or investor is the agent. When someone acts on behalf of another person or entity, they’re in a principal–agent relationship, and the agent has a fiduciary duty to the principal. That means the agent must act in the principal’s best interests, avoid conflicts of interest, and disclose any potential conflicts. This duty of loyalty is precisely what the term describes in the context of the question.

The other options don’t describe a person with this loyalty obligation: a draw request is just a form to request funds, a non-competition agreement is a contract restricting future activity, and the matching principle under GAAP is an accounting rule about timing of revenue and expense recognition.