Which One of the Following Is Least Apt to Help

question 51

Multiple Choice

Which one of the following is least apt to help convince managers to work in the best interest of the stockholders?

• A)Threat of a takeover of the firm by unsatisfied stockholders
• B)Implementation of a stock option plan
• C)Salary raises based on length of service
• D)Management compensation tied to the market value of the firm's stock
• E)Threat of a proxy fight

Understand the purpose and structure of the statement of cash flows.

Identify the adjustments necessary for the indirect method of cash flows related to net income.

Recognize the difference between cash and accrual basis as applied in the statement of cash flows.

Identify items not used in preparing the statement of cash flows.

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Definitions:

Rising Prices

An economic situation where the general level of prices for goods and services increases over a period of time.

Costing Method

It is an accounting approach to determine the cost of a product or service, including methods such as standard costing, activity-based costing, and others.

Net Income

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

Cost of Merchandise Sold

An expense account that reflects the direct costs associated with the goods sold by a company during an accounting period.