Which One of the Following Statements Is TRUE

question 35

Multiple Choice

Which one of the following statements is TRUE?

• A) management is said to be entrenched when senior managers are unlikely to be fired.
• B) a company's matching contribution to a retirement plan is a nonpecuniary benefit.
• C) company sponsorship of a local charity is an example of a nonpecuniary benefit.
• D) a manager/shareholder agency conflict arises when shareholders sell their stock even though management says the stock is undervalued.
• E) a manager/shareholder agency conflict arises when the board of directors pays a larger dividend than the firm's earnings could support.

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Definitions:

Base Amount

A reference value or starting point used for financial calculations, such as determining percentages or comparisons.

General-purpose Financial Statements

These are standardized financial reports prepared by organizations to provide key financial data to stakeholders such as income statements, balance sheets, and cash flow statements.

Income Statement

An income statement is a financial report that shows a company's revenues, expenses, and profits over a specific period.

Balance Sheet

A financial statement that provides a snapshot of a company’s assets, liabilities, and equity at a specific point in time.