Which of the Following Is (Are)effective in Controlling the Agency

question 60

Multiple Choice

Which of the following is (are) effective in controlling the agency problem?

• A)Tie a large part of managements' compensation to company profit
• B)Offer numerous perquisites
• C)Employ auditors to periodically review company books
• D)Both a and c

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Definitions:

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Cash Collections

The process of gathering all cash receipts and payments, including from sales, financing, or investment activities.

Credit Customers

Customers who purchase goods or services on credit, with an agreement to pay at a later date.

Cash Disbursements

The outflow of cash for the purpose of payment, often documented for accounting purposes.