Which of the Following Statements About Agency Theory Is True

question 12

Multiple Choice

Which of the following statements about agency theory is true?

• A) Accounting information is viewed as something that is 'right'.
• B) Conflicts of interest are regarded as unnatural.
• C) It tends to focus on the future-oriented,decision-making role of accounting information.
• D) It is concerned with contractual relationships among people.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or used up within one year or within the operating cycle, whichever is longer.

Current Liabilities

Current liabilities are financial obligations that a company expects to pay within one year, such as accounts payable, short-term loans, and taxes owed.

Cash Flow

Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business, indicating the organization's liquidity position over a period.

Present Value

The present worth of future monetary amounts or series of cash flows when calculated using a designated interest rate.