One of the Characteristics of a Principal-Agent Relationship Is

question 15

Multiple Choice

One of the characteristics of a principal-agent relationship is:

• A)The owners of the company are involved in the daily management of the company.
• B)The owners of the company hire an auditor to run the company for them and to make daily decisions for the company.
• C)The owners have more knowledge than management about the daily operations of the company.
• D)Outsiders benefit when an auditor is hired by owners to protect their interests in the company because the information available to outsiders is more likely to correspond to financial accounting standards.