Corporations Have a Separation and Control Problem Because

question 430

Multiple Choice

Corporations have a separation and control problem because

• A) owners and managers frequently have different incentives.
• B) most of the profits are reinvested.
• C) the shareholders control the firm.
• D) taxes are paid only by the board of directors.

---

Definitions:

Cash Disbursements

Outflows of cash for expenses, asset acquisitions, or other payments by a business during a specific period.

Operating Expenses

Recurring expenses related to the normal operations of a business, such as salaries, rent, and utilities.

Goods Purchased

The total value or volume of raw materials, components, or finished products acquired by a business for resale or production.

Production Budget

A detailed plan showing the number of units that must be produced during a period in order to satisfy both sales and inventory needs.