Which of the Following Is Not True Regarding Agency Theory

question 30

Multiple Choice

Which of the following is not true regarding agency theory?

• A)It is also called contracting theory.
• B)Its underlying assumption is that individuals act in their own best self-interest.
• C)Few agency relationships between parties may be defined or governed by accounting numbers.
• D)It is concerned with the various costs of monitoring and enforcing relations among management, owners, creditors, and government.

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Definitions:

Variances

Differences between expected and actual performance in areas like budget, costs, and schedule in financial and project management.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not change regardless of the level of production, such as salaries of supervisors and rent for the factory.

Budgeted Activity

The level of operation or volume of work planned for a period, used in budgeting and planning processes.

Fixed Overhead

Costs that do not vary with the level of production or sales, such as salaries and rent.