Post-Audits Create an Incentive for Managers to Make Accurate Estimates

question 117

True/False

Post-audits create an incentive for managers to make accurate estimates, since managers know that their results will be evaluated.

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Definitions:

Business Investment

The act of allocating resources, usually in the form of capital, to create, expand, or improve a business's assets.

Required Reserves

The minimum amount of funds that a bank or depository institution must hold in reserve against specified deposit liabilities.

Excess Reserves

are the funds that banks hold over and above the required minimum reserves mandated by the central bank.

Federal Reserve Banks

Part of the central banking system of the United States, responsible for implementing monetary policy, providing financial services, and supervising and regulating banks.