Which of the Following Events Will Likely Lead a Firm

question 4

Multiple Choice

Which of the following events will likely lead a firm to use overtime rather than hire new workers?

• A) The firm gets rid of its pension plan.
• B) The firm starts to pay for health insurance.
• C) The marginal productivity of all workers, new and current, increases 20%.
• D) Both overtime and base pay increase 20%.

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Definitions:

Perpetual Inventory System

An inventory system that tracks merchandise in real-time, updating inventory records immediately upon purchase or sale.

Periodic Inventory System

An inventory accounting system where updates to inventory levels and Cost of Goods Sold are made at set intervals.

GAAP

Generally Accepted Accounting Principles, which are a common set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.

IFRS

International Financial Reporting Standards, a set of accounting standards providing a global framework for how public companies prepare financial statements.