Employee Stock Options

question 9

Multiple Choice

Employee stock options:

• A) usually have a positive intrinsic value when issued.
• B) must be backdated at least six months to comply with Sarbanes-Oxley.
• C) are generally "underwater" when issued.
• D) are frequently repriced if the options are in-the-money.
• E) are generally issued with a zero intrinsic value.

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Definitions:

Direct Method

A method of allocating service department costs directly to production departments without considering inter-service department flows.

Accounts Receivable

Funds that clients or customers owe to a company for products or services provided but for which payment has not yet been received.

Accounts Payable

Money owed by a company to its suppliers or vendors for goods and services received, representing a liability on the balance sheet.

Direct Method

A financial accounting method that allocates service department costs directly to production departments without considering services rendered between service departments.