If an Employee Is Paid a Fixed Wage in a Production

question 32

Multiple Choice

If an employee is paid a fixed wage in a production environment where the wage is independent of output,then the employee has an incentive to:

• A)maximize output.
• B)shirk.
• C)innovate.
• D)search for methods to overcome random elements in production.

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Definitions:

Overstate Liabilities

Refers to the act of reporting liabilities on the financial statements at amounts higher than what is true or accurate.

Internal Controls

Mechanisms, policies, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Safeguarding Assets

Refers to the actions and policies put in place by an organization to protect its assets from theft, damage, or misuse.

Voucher System

A method of accounting in which documents are used to authorize and record transactions.