Question 1

A current theme in rewarding senior staff is which of the following?

Accepted Answer

A)  relative performance evaluation 
B)  pay-for-performance 
C)  the place of government regulation 
D)  all of the above are current themes in rewarding senior staff 
A)  relative performance evaluation 
B)  pay-for-performance 
C)  the place of government regulation 
D)  all of the above are current themes in rewarding senior staff

Question 2

Managers can reduce agency costs through the use of compensation contracts.

Accepted Answer

A) True 
 B)False

Question 3

Which of these is correct concerning agency theory? Normally the

Accepted Answer

A)  Chief Executive Officer (CEO) is a principal and an agent 
B)  Chief Executive Officer (CEO) is a principal only 
C)  Chief Executive Officer (CEO) is an agent only 
D)  None of the above is correct 
A)  Chief Executive Officer (CEO) is a principal and an agent 
B)  Chief Executive Officer (CEO) is a principal only 
C)  Chief Executive Officer (CEO) is an agent only 
D)  None of the above is correct

Question 4

Compensation contracts that provide incentives for agents to increase organisational value might include

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III 
A)  I and II only 
B)  II and III only 
C)  I and III only 
D)  I, II, and III

Question 5

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

Accepted Answer

A)  Strategic risk 
B)  Financial risk 
C)  Legal and regulatory risk 
D)  Operational risk 
A)  Strategic risk 
B)  Financial risk 
C)  Legal and regulatory risk 
D)  Operational risk

Question 6

In the largest Australian companies bonuses typically make up what percentage of the total compensation package for top executives?

Accepted Answer

A)  20% 
B)  40% 
C)  60% 
D)  80% 
A)  20% 
B)  40% 
C)  60% 
D)  80%

Question 7

When executive pay is linked closely to the firm's performance it is not possible for executives' pay to increase when the company's share price is falling.

Accepted Answer

A) True 
 B)False

Question 8

Agency theory recognises two kinds of information consumers. Which of the following describes the relationship between them?

Accepted Answer

A)  Principals hire agents to make decisions for them. 
B)  Agents hire principals to hold them accountable for decisions. 
C)  Principals and agents work together in the best interest of the organisation. 
D)  Principals are government employees, while agents work in the private sector. 
A)  Principals hire agents to make decisions for them. 
B)  Agents hire principals to hold them accountable for decisions. 
C)  Principals and agents work together in the best interest of the organisation. 
D)  Principals are government employees, while agents work in the private sector.

Question 9

Successful companies need to carefully balance management control and risk taking.

Accepted Answer

A) True 
 B)False

Question 10

What type of theory provides an analytical framework for the conflicts that arise between owners and managers?

Accepted Answer

A)  Decision making theory 
B)  Life cycle theory 
C)  Agency theory 
D)  Evaluation theory 
A)  Decision making theory 
B)  Life cycle theory 
C)  Agency theory 
D)  Evaluation theory

Question 11

A manager under-investing in projects that are in shareholder's best interests but which may reduce the manager's own bonus payment, is classed as which type of agency cost?

Accepted Answer

A)  Loss from a poor decision 
B)  Monitoring cost 
C)  Loss from incongruent goals 
D)  Contracting cost 
A)  Loss from a poor decision 
B)  Monitoring cost 
C)  Loss from incongruent goals 
D)  Contracting cost

Question 12

Which of these is an advantage of rewarding senior executives with cash rather than with non-cash payments?

Accepted Answer

A)  It helps to overcome the agency problem 
B)  It is likely to be preferred by a risk-averse executive 
C)  The lasting nature of cash 
D)  All of the above are advantages 
A)  It helps to overcome the agency problem 
B)  It is likely to be preferred by a risk-averse executive 
C)  The lasting nature of cash 
D)  All of the above are advantages

Question 13

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Accepted Answer

A) True 
 B)False

Question 14

Reward systems at top management level are most commonly fixed payment packages.

Accepted Answer

A) True 
 B)False

Question 15

Which of these is a not a policy in a banking group that would help reduce company risk?

Accepted Answer

A)  Requiring more scrutiny of less successful traders and less of the more successful 
B)  Requiring all employees to take regular holidays 
C)  Ensuring that incentive systems don't encourage excessive risk taking 
D)  None of the above, i.e. all are policies that would help reduce company risk 
A)  Requiring more scrutiny of less successful traders and less of the more successful 
B)  Requiring all employees to take regular holidays 
C)  Ensuring that incentive systems don't encourage excessive risk taking 
D)  None of the above, i.e. all are policies that would help reduce company risk

Question 16

Decentralisation typically eliminates agency costs from for-profit organisations.

Accepted Answer

A) True 
 B)False

Question 17

An organisation's chief executive officer can be both a principal and an agent.

Accepted Answer

A) True 
 B)False

Question 18

Regulation in Australia with respect to reward systems for senior executives is

Accepted Answer

A)  found in the Corporations Act 
B)  found in the ASX Listing Rules 
C)  there is no regulation in Australia that deals specifically with the rewards of senior executives 
D)  a and b 
A)  found in the Corporations Act 
B)  found in the ASX Listing Rules 
C)  there is no regulation in Australia that deals specifically with the rewards of senior executives 
D)  a and b

Question 19

Agency theory is an analytical framework that tells managers how to solve potential conflicts with shareholders.

Accepted Answer

A) True 
 B)False

Question 20

The correct statement concerning intrinsic and extrinsic rewards is

Accepted Answer

A)  A cash bonus paid to an executive by the company is an intrinsic reward 
B)  A holiday paid for by the company for an executive is an extrinsic reward 
C)  Extrinsic rewards are non-cash incentives 
D)  All of the statements are true 
A)  A cash bonus paid to an executive by the company is an intrinsic reward 
B)  A holiday paid for by the company for an executive is an extrinsic reward 
C)  Extrinsic rewards are non-cash incentives 
D)  All of the statements are true

A current theme in rewarding senior staff is which of the following?

Managers can reduce agency costs through the use of compensation contracts.

Which of these is correct concerning agency theory? Normally the

Compensation contracts that provide incentives for agents to increase organisational value might include

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

In the largest Australian companies bonuses typically make up what percentage of the total compensation package for top executives?

When executive pay is linked closely to the firm's performance it is not possible for executives' pay to increase when the company's share price is falling.

Agency theory recognises two kinds of information consumers. Which of the following describes the relationship between them?

Successful companies need to carefully balance management control and risk taking.

What type of theory provides an analytical framework for the conflicts that arise between owners and managers?

A manager under-investing in projects that are in shareholder's best interests but which may reduce the manager's own bonus payment, is classed as which type of agency cost?

Which of these is an advantage of rewarding senior executives with cash rather than with non-cash payments?

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Reward systems at top management level are most commonly fixed payment packages.

Which of these is a not a policy in a banking group that would help reduce company risk?

Decentralisation typically eliminates agency costs from for-profit organisations.

An organisation's chief executive officer can be both a principal and an agent.

Regulation in Australia with respect to reward systems for senior executives is

Agency theory is an analytical framework that tells managers how to solve potential conflicts with shareholders.

The correct statement concerning intrinsic and extrinsic rewards is

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Sustainability Management Accounting

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Exam 19: Rewards, Incentives and Risk Management

A current theme in rewarding senior staff is which of the following?

Managers can reduce agency costs through the use of compensation contracts.

Which of these is correct concerning agency theory? Normally the

Compensation contracts that provide incentives for agents to increase organisational value might include

According to the CoCo (criteria of control) guidance on control integrated framework, the impact of a carbon pollution reduction scheme would be classed as which category of risk?

In the largest Australian companies bonuses typically make up what percentage of the total compensation package for top executives?

When executive pay is linked closely to the firm's performance it is not possible for executives' pay to increase when the company's share price is falling.

Agency theory recognises two kinds of information consumers. Which of the following describes the relationship between them?

Successful companies need to carefully balance management control and risk taking.

What type of theory provides an analytical framework for the conflicts that arise between owners and managers?

A manager under-investing in projects that are in shareholder's best interests but which may reduce the manager's own bonus payment, is classed as which type of agency cost?

Which of these is an advantage of rewarding senior executives with cash rather than with non-cash payments?

Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.

Reward systems at top management level are most commonly fixed payment packages.

Which of these is a not a policy in a banking group that would help reduce company risk?

Decentralisation typically eliminates agency costs from for-profit organisations.

An organisation's chief executive officer can be both a principal and an agent.

Regulation in Australia with respect to reward systems for senior executives is

Agency theory is an analytical framework that tells managers how to solve potential conflicts with shareholders.

The correct statement concerning intrinsic and extrinsic rewards is

The Role of Accounting Information in Management Decision Making

Cost Concepts, Behaviour and Estimation

A Costing Framework and Cost Allocation

Cost-Volume-Profit Cvp Analysis

Job Costing Systems

Process Costing Systems

Absorption, Variable and Throughput Costing

Activity Analysis: Costing and Management

Relevant Costs for Decision Making

Standard Costs, Flexible Budgets and Variance Analysis

Operational Budgets

Strategy and Control

Planning and Budgeting for Strategic Success

Capital Budgeting and Strategic Investment Decisions

The Strategic Management of Costs and Revenues

Strategic Management Control: a Lean Perspective

Responsibility Accounting, Performance Evaluation and Transfer Pricing

The Balanced Scorecard and Strategy Maps

Sustainability Management Accounting

Filters