Reports in the Financial Press That a Particular Company Reported

question 58

Multiple Choice

Reports in the financial press that a particular company reported healthy profits despite increased wage costs are indicative of:

• A) The negative impact of reporting payments to employees as expenses while payments to owners are treated as distributions of profits.
• B) The implied emphasis on the returns to owners being good and returns to other stakeholders such as employees as being bad.
• C) The effect of reporting employees as expenses and not reporting the social costs of unemployment on decisions to restructure companies to reduce the work force.
• D) The way accounting reflects and helps to re-create widely held views about the roles of various stakeholders in the entity.
• E) All of the given answers.

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Definitions:

Net Assets

The total assets of a company after deducting its total liabilities, representing the owners' equity in the company.

Common Shares

Equities representing ownership interests in a company, entitling holders to a share in the company's profits and voting rights in certain decisions.

Straight-Line Depreciation

An accounting method that allocates the cost of an asset evenly over its useful life.

Voting Stock

Shares in a company that give the shareholder the right to vote on company matters, such as electing the board of directors.