Which of the Following Actions Is Consistent with Social Responsibility

question 20

Multiple Choice

Which of the following actions is consistent with social responsibility and is not necessarily inconsistent with stockholder wealth maximization?

• A)Selling a smokestack "scrubber" required by the firm's air pollution policy that is also mandated by law.
• B)Dumping effluent discharge into a river, where it ruins the drinking water of the community around the plant. The installation of machinery to treat the effluents is very expensive.
• C)Investing in a smokestack filter to reduce sulphur-dioxide emissions to decrease the tax being levied on the firm by the state for pollution it produces each year.
• D)Making a large corporate donation to the local community for funding a recreation complex that can be used by the firm's employees only.
• E)Consider taking over the competitor's business in an attempt to establish monopoly for its product in the market.

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Definitions:

Journal Entry

A record in the books of accounts that represents a business transaction, involving at least two accounts to record the financial activity.

Amortization

The gradual reduction of a debt or the spreading out of capital expenses over a fixed period of time.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since its acquisition.