What Does the Equity Theory Explain

question 35

Multiple Choice

What does the equity theory explain?

• A) why there is a perceived imbalance between the wages that men earn and that women earn
• B) how employees respond when they believe they receive less (or more) than they deserve
• C) how organizations define and build their compensation systems
• D) why organizations provide direct and indirection compensation to employees

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Definitions:

Prepaid

Expenses paid in advance for goods or services, which are then recognized over time as the benefits are received.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the financial statements, representing liabilities.

Accrued Revenues

Accrued revenues are earnings recorded in the financial statements for goods delivered or services provided, although no cash has been received yet.

Prepaid Items

Prepaid items refer to expenses paid in advance for goods or services to be received in the future.