Elizabeth and George Are Talking About Their Work at Apex

question 7

Essay

Elizabeth and George are talking about their work at Apex Manufacturing. They both perform the same job, work the same number of hours, and are relatively equal in their performance levels. Elizabeth mentions to George that she is making $18 per hour. George is surprised by this, because he is only making $16 per hour. According to equity theory, what would you predict George's reaction to be?
What sort of behaviors might you see from George?

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Definitions:

Temporary Account

A temporary account is an account that is closed at the end of each accounting period, with its balances transferred to permanent accounts, used to track revenues, expenses, and withdrawals during the period.

Retained Earnings

Cumulative net income minus dividends paid to shareholders, representing the business's reinvested profits.

Accounting Information System

A structure that collects, stores, manages, processes, retrieves, and reports financial data for its users, facilitating informed business decisions.

Financial Accounting

The process of recording, summarizing, and reporting the myriad of transactions resulting from business operations over a period of time, in order to produce financial statements.