Which of the Following Is Not a Characteristic of Performance

question 23

Multiple Choice

Which of the following is not a characteristic of performance based pay?

• A)The slope of the relationship between pay and performance for an employee provides incentives for effort,not the level of pay
• B)Employees will always prefer performance based pay thus aligning principal/agent objectives
• C)The overall value maximizing effort level for an employee occurs when personal marginal benefit equals personal marginal cost
• D)Performance based pay can resolve hidden information problems
• E)Pay contracts approaching 100% commission and negative salaries can occur

---

Definitions:

Account Balances

The amounts of money held in financial accounts, calculated as the funds deposited minus funds withdrawn, plus any interest or capital gains.

Prepaid Account

An account reflecting payments made in advance for goods or services, which are recognized as expenses when the goods or services are actually consumed.

Accounts Payable

Short-term liabilities representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to check the accuracy of the entries.