Consider the Following Statements

question 43

Multiple Choice

Consider the following statements:
i.A corporation differs from other forms of business organisation only in that it tends to be larger.
ii.The corporate form of business organisation is destined to fail because 'managers',and not the 'owners',run the business.
iii.The corporate entity ceases on the death or bankruptcy of the individual shareholders.
iv.The stock exchange is important to the corporation only because it provides the institutional framework through which new shares may be sold to the public.
v.Maximisation of shareholder utility is presumed when managers maximise possible profit.
How many of these statements are true and how many are false?

• A) 1 statement is true and 4 are false
• B) 2 statements are true and 3 are false
• C) 3 statements are true and 2 are false
• D) 4 statements are true and 1 is false

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Definitions:

Controllable Variance

The difference between actual and budgeted costs that management can influence through its actions.

Controllable Variance

A measure in accounting that represents the difference between actual costs and the budgeted amounts that management could control or influence.

Indirect Factory Wages

Wages paid to employees who are not directly involved in production but whose services are necessary for the manufacturing process.

Budgeted Amounts

Financial projections or estimates of revenue and expenses over a specified period, used for planning and control purposes.