Which One of the Following Statements Is TRUE

question 32

Multiple Choice

Which one of the following statements is TRUE?

• A) a manager/shareholder agency conflict arises when the manager's actions aren't in the company's best interest.
• B) an agency problem occurs when an owner/manager sells stock to an outside investor and the owner/manager fears the outside investor will consume too many perquisites.
• C) an agency conflict between inside owners/managers and outside owners occurs when the outside owners sell their shares to someone else.
• D) a quarter-end bonus is an example of a nonpecuniary benefit.
• E) a company's matching contribution to a retirement plan is a nonpecuniary benefit.

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Definitions:

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, the terms of credit to offer, and how to collect payments.

Accounts Receivable

Money owed to a company by its debtors for goods or services delivered but not yet paid for.

Credit Standards

The financial strength and creditworthiness that qualifies a customer for a firm’s regular credit terms.

Financial Importance

Financial importance refers to the significance placed on managing finances effectively to ensure stability and growth of an individual's or organization's assets.