Refer to the Information Provided in Figure 17

question 132

Multiple Choice

Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. Figure 17.1
-Refer to Figure 17.1. John has two job offers when he graduates from college. John views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $50,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $60,000. John believes that he has a 50-50 chance of earning the bonus. If John takes the offer that maximizes his expected utility and is risk-averse, which job offer will he choose?

• A) John will take the first offer.
• B) John will take the second offer.
• C) John is indifferent between the offers-both yield the same expected utility.
• D) Indeterminate from the given information.

---

Definitions:

Ledger Account

A record that keeps track of all the transactions related to a particular aspect of a business's finances, such as sales or assets.

Land And Buildings

Assets categorization in accounting, where land refers to the cost of land owned by a company and buildings to the cost of structures situated on the land.

Source Documents

Original records and documents that provide evidence of financial transactions and are the foundation for recording entries in the business’s accounting system.

Sales Receipts

Documents that evidence the sale of goods or services and the payment received for those sales.