Match the Terms with the Definitions

question 33

Multiple Choice

Match the terms with the definitions.

-Items a business owns that will provide future benefits.

• A) account
• B) accounts payable
• C) accounts receivable
• D) accounting equation
• E) assets
• F) balance sheet
• G) business entity
• H) business entity concept
• I) business transaction
• J) drawing
• K) expenses
• L) income statement
• M) liability
• N) net income
• O) net loss
• P) notes payable
• Q) owner's equity
• R) revenues
• S) statement of owner's equity

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Definitions:

Asymmetric Information

A situation where one party in a transaction has more or better information than the other, leading to an imbalance in power and potentially unfair outcomes.

Hidden Action

A situation in which an agent's actions are not fully observable by the principal, potentially leading to moral hazard.

Moral Hazard

A situation where one party engages in risky behavior knowing that it is protected against the consequences, often due to an asymmetry of information or a misalignment of incentives.

Imperfectly Monitored

A situation where there is insufficient oversight or observation, often leading to non-compliance or deviation from expected standards.