Which One of the Following Statements Is TRUE

question 37

Multiple Choice

Which one of the following statements is TRUE?

• A) Personal use of the corporate jet is an example of a nonpecuniary benefit.
• B) A supplier substituting a lower-quality raw material without approval is an example of asset switching.
• C) An agency problem occurs when an owner/manager sells stock to an outside investor and the owner/manager fears the outside investor will consume too many perquisites.
• D) An agency conflict between inside owners/managers and outside owners occurs when the outside owners sell their shares to someone else.
• E) A quarter-end bonus is an example of a nonpecuniary benefit.

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Definitions:

Lawn Service

A business that provides maintenance services for lawns and gardens, including mowing, fertilizing, and weed control.

Office Grounds

The outdoor area or surroundings of an office building, which can include landscaping, parking lots, and other external features.

Administrative Expense

Costs related to the general administration of a company, including expenditures such as executive salaries, office supplies, and legal and financial services.

Period Cost

Expenses that are not directly tied to production and are therefore expensed in the period they are incurred.