Principal-Agent Problems Are Less Likely to Arise

question 187

Multiple Choice

Principal-agent problems are less likely to arise

• A)if it is easy for principals to know agents' actions and if there is less conflict between their goals
• B)if it is difficult for principals to know agents' actions and if there is less conflict between their goals
• C)if it is easy for principals to know agents' actions and if there is some difference in their goals
• D)if it is difficult for principals to know agents' actions and if there is some difference in their goals
• E)if agents have higher incomes

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Definitions:

Gross Profit Percentage

A financial metric expressed as a percentage that calculates the gross profit as a portion of net sales, indicating how efficiently a company uses its resources.

Research and Development

Activities undertaken by a company to innovate and introduce new products or services, or to improve their existing offerings.

International Financial Reporting Standards

A set of accounting standards developed by the International Accounting Standards Board that provides globally consistent financial reporting norms.

Inventory Write-Downs

An accounting process of reducing the cost of inventory that has declined in value below its original cost.