Question 1

Companies generally base most of the divisional managers' compensation on which of the following?

Accepted Answer

A) management-based performance. 
B) performance based on financial measures. 
C) the company's stock performance. 
D) accounting-based performance. 
A) management-based performance. 
B) performance based on financial measures. 
C) the company's stock performance. 
D) accounting-based performance.

Question 2

How do companies that are large,highly integrated and very centralized,weight the performance evaluation?

Accepted Answer

A) more on each division's performance and less on company-wide performance. 
B) less on each division's performance and more on company-wide performance. 
C) on the stock market performance of the company's shares,only. 
D) equally between each division's performance and company-wide performance. 
A) more on each division's performance and less on company-wide performance. 
B) less on each division's performance and more on company-wide performance. 
C) on the stock market performance of the company's shares,only. 
D) equally between each division's performance and company-wide performance.

Question 3

Which of the following is not a control that can be instituted to prevent financial fraud?

Accepted Answer

A) Separate duties 
B) Encourage collusion 
C) Internal audits 
D) Independent audits 
A) Separate duties 
B) Encourage collusion 
C) Internal audits 
D) Independent audits

Question 4

Which of the following is a model based on four perspectives: (1)learning and growth, (2)internal business and production process efficiency, (3)customer,and (4)financial?

Accepted Answer

A) Zero-based budgeting 
B) Planning programming and budgeting 
C) Management by objectives 
D) Balanced scorecard 
A) Zero-based budgeting 
B) Planning programming and budgeting 
C) Management by objectives 
D) Balanced scorecard

Question 5

The agency theory of motivation deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors.Supervisors and workers,respectively,are called

Accepted Answer

A) principals and agents. 
B) agents and employees. 
C) masters and slaves. 
D) lords and serfs. 
A) principals and agents. 
B) agents and employees. 
C) masters and slaves. 
D) lords and serfs.

Question 6

Compare and contrast expectancy and agency approaches to motivation.

Accepted Answer

The expectancy view of motivation recomm

Question 7

Deferred compensation that gives an individual the right to purchase a specified number of shares of the company's stock at a specified price within a specified time period is/are called

Accepted Answer

A) stock puts. 
B) stock options. 
C) stock calls. 
D) stock puts and stock calls. 
A) stock puts. 
B) stock options. 
C) stock calls. 
D) stock puts and stock calls.

Question 8

What is true of the Foreign Corrupt Practices Act?

Accepted Answer

A) It is illegal for any U.S.citizen or company to bribe foreign government officials in the course of business. 
B) Questionable payments to foreign officials,record keeping,and internal accounting control are addressed. 
C) "Grease payments" paid to low-level foreign government employees to expedite routine matters are permitted. 
D) All of the answers are correct. 
A) It is illegal for any U.S.citizen or company to bribe foreign government officials in the course of business. 
B) Questionable payments to foreign officials,record keeping,and internal accounting control are addressed. 
C) "Grease payments" paid to low-level foreign government employees to expedite routine matters are permitted. 
D) All of the answers are correct.

Question 9

What is the law which makes it illegal for any U.S.citizen or company to bribe foreign government officials in the course of business?

Accepted Answer

A) Foreign Anti-bribery Practices Act. 
B) Foreign Corruption Act. 
C) Foreign Corrupt Practices Act. 
D) Foreign Bribery and Corruption Act. 
A) Foreign Anti-bribery Practices Act. 
B) Foreign Corruption Act. 
C) Foreign Corrupt Practices Act. 
D) Foreign Bribery and Corruption Act.

Question 10

Carson Company uses a cost of capital rate of 10 percent in making investment decisions.It currently is considering two mutually exclusive projects,each requiring an initial investment of $12 million.The first project has a net present value of $23 million and an internal rate of return of 18 percent.The firm will complete this project within one year.It will raise accounting income and earnings per share almost immediately thereafter.The second project has a net present value of $45 million and an internal rate of return of 28 percent.The second project requires incurring large,noncapitalizable expenses over the next few years before net cash inflows from sales revenue result.Thus accounting income and earnings per share for the next few years will not only be lower than if the first project is accepted but will also be lower than earnings currently reported.
Required:
a.Should the short-run effects on accounting income and earnings per share influence the decision about the choice of projects? Explain.
b.Should either of the projects be accepted? If so,which one? Why?

Accepted Answer

a.Management should not make decisions o

Question 11

When can internal controls to prevent fraud can be ineffective?

Accepted Answer

A) When banking institutions go out of business or merge with other banking institutions. 
B) When standard operating procedures are followed. 
C) When collusion exists between two or more employees. 
D) When customers invoke the Foreign Corrupt Practices Act. 
A) When banking institutions go out of business or merge with other banking institutions. 
B) When standard operating procedures are followed. 
C) When collusion exists between two or more employees. 
D) When customers invoke the Foreign Corrupt Practices Act.

Question 12

How does fraudulent financial reporting differ from simply making an error in financial reporting?

Accepted Answer

Fraudulent financial reporting

Question 13

Because effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth,for long-term incentives firms give

Accepted Answer

A) cash bonuses and profit sharing. 
B) deferred compensation. 
C) special awards. 
D) reorganizations. 
A) cash bonuses and profit sharing. 
B) deferred compensation. 
C) special awards. 
D) reorganizations.

Question 14

According to the agency view,the objective of a good incentive compensation system is to do which of the following?

Accepted Answer

A) maximize principal wealth. 
B) maximize agent wealth. 
C) strike a fair balance between principal and agency wealth. 
D) minimize agency costs. 
A) maximize principal wealth. 
B) maximize agent wealth. 
C) strike a fair balance between principal and agency wealth. 
D) minimize agency costs.

Question 15

Which is a disadvantagefor a company to use relative performance evaluations?

Accepted Answer

A) Forces managers to seek,new,more profitable opportunities. 
B) Shields managers from the risk of managing a division in a poorly performing industry. 
C) Does not provide incentives for managers to move out of low-performing to high-performing industries. 
D) None of the answers are disadvantages. 
A) Forces managers to seek,new,more profitable opportunities. 
B) Shields managers from the risk of managing a division in a poorly performing industry. 
C) Does not provide incentives for managers to move out of low-performing to high-performing industries. 
D) None of the answers are disadvantages.

Question 16

What is true concerning applications of incentive compensation plans to nonprofit organizations?

Accepted Answer

A) These plans rely heavily on intrinsic rewards. 
B) These plans lack high financial payoffs for excellent performance. 
C) These plans involve adherence to rules set down by top authorities. 
D) All of the answers are correct. 
A) These plans rely heavily on intrinsic rewards. 
B) These plans lack high financial payoffs for excellent performance. 
C) These plans involve adherence to rules set down by top authorities. 
D) All of the answers are correct.

Question 17

When does improper revenue recognition usually occur?

Accepted Answer

A) When reporting profit-decreasing effects of revenue in the wrong accounting period. 
B) When reporting profit-increasing effects of revenue in the wrong accounting period. 
C) When reporting profit-decreasing effects of cash flows in the wrong accounting period. 
D) When reporting profit-increasing effects of cash flows in the wrong accounting period. 
A) When reporting profit-decreasing effects of revenue in the wrong accounting period. 
B) When reporting profit-increasing effects of revenue in the wrong accounting period. 
C) When reporting profit-decreasing effects of cash flows in the wrong accounting period. 
D) When reporting profit-increasing effects of cash flows in the wrong accounting period.

Question 18

Bowers Company is considering a new accounting policy to write-off of design and development costs as current period expenses.Explain how this could affect managers' incentives to incur these costs.

Accepted Answer

Writing off design and development costs

Question 19

Extrinsic rewards include rewards from a(n)

Accepted Answer

A) teacher. 
B) parent or a spouse. 
C) organization. 
D) All of the answers are correct. 
A) teacher. 
B) parent or a spouse. 
C) organization. 
D) All of the answers are correct.

Question 20

High-pressure performance evaluation systems not only put pressure on people to perform well but also create incentives to

Accepted Answer

A) be motivated. 
B) "manage earnings." 
C) leave the company. 
D) None of the answers is correct. 
A) be motivated. 
B) "manage earnings." 
C) leave the company. 
D) None of the answers is correct.

Companies generally base most of the divisional managers' compensation on which of the following?

How do companies that are large,highly integrated and very centralized,weight the performance evaluation?

Which of the following is not a control that can be instituted to prevent financial fraud?

Which of the following is a model based on four perspectives: (1)learning and growth, (2)internal business and production process efficiency, (3)customer,and (4)financial?

The agency theory of motivation deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors.Supervisors and workers,respectively,are called

Compare and contrast expectancy and agency approaches to motivation.

Deferred compensation that gives an individual the right to purchase a specified number of shares of the company's stock at a specified price within a specified time period is/are called

What is true of the Foreign Corrupt Practices Act?

What is the law which makes it illegal for any U.S.citizen or company to bribe foreign government officials in the course of business?

When can internal controls to prevent fraud can be ineffective?

How does fraudulent financial reporting differ from simply making an error in financial reporting?

Because effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth,for long-term incentives firms give

According to the agency view,the objective of a good incentive compensation system is to do which of the following?

Which is a disadvantagefor a company to use relative performance evaluations?

What is true concerning applications of incentive compensation plans to nonprofit organizations?

When does improper revenue recognition usually occur?

Bowers Company is considering a new accounting policy to write-off of design and development costs as current period expenses.Explain how this could affect managers' incentives to incur these costs.

Extrinsic rewards include rewards from a(n)

High-pressure performance evaluation systems not only put pressure on people to perform well but also create incentives to

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Allocating Costs to Responsibility Centers

Filters

Exam 12: Incentive Issues

Companies generally base most of the divisional managers' compensation on which of the following?

How do companies that are large,highly integrated and very centralized,weight the performance evaluation?

Which of the following is not a control that can be instituted to prevent financial fraud?

Which of the following is a model based on four perspectives: (1)learning and growth, (2)internal business and production process efficiency, (3)customer,and (4)financial?

The agency theory of motivation deals with relationships between supervisors and workers where the principals assign responsibility to the workers and the workers work on behalf of the supervisors.Supervisors and workers,respectively,are called

Compare and contrast expectancy and agency approaches to motivation.

Deferred compensation that gives an individual the right to purchase a specified number of shares of the company's stock at a specified price within a specified time period is/are called

What is true of the Foreign Corrupt Practices Act?

What is the law which makes it illegal for any U.S.citizen or company to bribe foreign government officials in the course of business?

When can internal controls to prevent fraud can be ineffective?

How does fraudulent financial reporting differ from simply making an error in financial reporting?

Because effective incentive compensation plans must induce individual behavior compatible with increasing the firm's wealth,for long-term incentives firms give

According to the agency view,the objective of a good incentive compensation system is to do which of the following?

Which is a disadvantagefor a company to use relative performance evaluations?

What is true concerning applications of incentive compensation plans to nonprofit organizations?

When does improper revenue recognition usually occur?

Bowers Company is considering a new accounting policy to write-off of design and development costs as current period expenses.Explain how this could affect managers' incentives to incur these costs.

Extrinsic rewards include rewards from a(n)

High-pressure performance evaluation systems not only put pressure on people to perform well but also create incentives to

Fundamental Concepts

Measuring Product Costs

Activity-Based Management

Strategic Management of Costs,quality,and Time

Cost Drivers and Cost Behavior

Financial Modeling for Short-Term Decision Making

Differential Cost Analysis for Operating Decisions

Capital Expenditure Decisions

Profit Planning and Budgeting

Profit and Cost Center Performance Evaluation

Investment Center Performance Evaluation

Allocating Costs to Responsibility Centers

Filters