Which of the Following Is Not an Example of an Agency

question 7

Multiple Choice

Which of the following is not an example of an agency cost?

• A) a lavish dinner or trip.
• B) a missed investment opportunity.
• C) a cost that results from a conflict of interest between the agent and the principal.
• D) the cost of a new piece of equipment.

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Definitions:

Retained Earnings Account

An equity account that represents the accumulated profits of a company that have not been distributed to shareholders as dividends.

Income Statement Account

An income statement account is a financial account that reflects income, expenses, gains, and losses over a period, used to calculate net income.

Stock Dividend

A distribution of additional shares of a company to its shareholders instead of paying cash dividends, often used to conserve cash while still rewarding investors.

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer, which often bears no relation to its market value.