Agency Theory Can Be Described as the Theory Of

question 7

Multiple Choice

Agency theory can be described as the theory of:

• A)the relationship between the owner and the management of the business when the owner is not the manager of the business.
• B)when the finance function is outsourced to an outside party,and the auditor is required to audit the outside party's work.
• C)hiring an agency to review the work of the management,in this case it is the auditor.
• D)none of the above.

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Definitions:

Incremental Cash Flows

The additional cash flow generated by a company from undertaking a particular project or investment.

New Venture

Refers to a newly established business entity created with the intention of entering a market.

Opportunity Cost

The financial loss involved in not selecting the subsequent top preference during the decision-making process.

Cash Flow Estimate

An approximation of the amount of money expected to move in and out of a business within a specific time period.