Company X Pays for Performance

question 31

Multiple Choice

Company X pays for performance.Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards.This is an example of the:

• A)design effect.
• B)compensation effect.
• C)sorting effect.
• D)incentive effect.

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Definitions:

Common Stock

Represents ownership shares in a corporation, granting shareholders voting rights and a share in the company's profits through dividends.

Account Receivable

Money owed to a company for goods or services that have been delivered but not yet paid for by customers.

Promissory Note

A financial document in which one party promises in writing to pay a determinate sum of money to another party under specific terms.

Dividends

Payments made by a corporation to its shareholders, usually derived from profits, as a distribution of earnings.