The Main Issue in the Debate Over Accounting for Employee

question 56

Multiple Choice

The main issue in the debate over accounting for employee stock options was:

• A) Which employees should receive options.
• B) The amount of compensation expense that a company should recognize.
• C) How many options should be granted to key executives.
• D) The tax consequences of employee stock options.

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Definitions:

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, such as a bank or investment firm.

Fund Manager

An individual responsible for making investment decisions for a portfolio of securities, implementing investment strategies for a mutual fund or institutional investor.

Shareholders

Individuals or entities that own shares in a corporation and therefore have an ownership interest in the company.

Privately-Held Firms

Businesses whose ownership is private, meaning their shares are not traded on public stock exchanges.