Principles of Accounting Volume 2
19th Edition
ISBN: 9781947172609
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 1, Problem 16Q
How can having a bonus system based purely on sales goals create an environment that encourages unethical behavior?
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Which of the following is not a reason why conflicts of interest may not be harmful?
Conflicts of interest may result in synergies that make it easier to produce information.
Conflicts of interest may result in lower prices for consumers.
Conflicts of interest may result in more efficient markets.
All of the above choices.
Explain why rewarding sales personnel on the basisof total sales might not be in the best interests of abusiness whose goal is to maximize profits.
Describe an adverse selection problem a company is facing. What is the source of the asymmetric information? Who is the less informed party? What transactions are not being consummated as a result of the information? Could you (or do you) use signaling or screening to consummate these transactions? Offer your company some sound advice, complete with computations of the attendant profit consequences.
Chapter 1 Solutions
Principles of Accounting Volume 2
Ch. 1 - The managers of an organization are responsible...Ch. 1 - Management accountants help the management of an...Ch. 1 - Which of the following is a primary aspect of the...Ch. 1 - During the control function, the measurements...Ch. 1 - Which of the following is false regarding...Ch. 1 - Managerial accounting produces information: to...Ch. 1 - Management accounting: emphasizes special-purpose...Ch. 1 - Internal users of accounting information would not...Ch. 1 - External users of accounting information would...Ch. 1 - Which of the following statements is incorrect?...
Ch. 1 - The stockholders of a company are: the owners...Ch. 1 - The controller of a corporation: reports to the...Ch. 1 - The Certified Financial Analyst (CFA)...Ch. 1 - The Certified Management Accountant (CMA)...Ch. 1 - Which of the following terms means the ability to...Ch. 1 - Which of the following terms means knowing how a...Ch. 1 - What is the law that protects investors from...Ch. 1 - What year was the Sarbanes-Oxley Act enacted? 2007...Ch. 1 - When a representative of an organization gives...Ch. 1 - The law that specifically prohibits payments to...Ch. 1 - Which of the following is not a step in the...Ch. 1 - Which of the following is not an objective used in...Ch. 1 - Which of the following is not true regarding...Ch. 1 - A companys attempts to utilize sustainable...Ch. 1 - A process that is often linked to Six Sigma and is...Ch. 1 - An inventory system that organizations use to...Ch. 1 - A quality control program that depends on multiple...Ch. 1 - Carlita believes an important part of the planning...Ch. 1 - What are some activities and tasks a manager might...Ch. 1 - If there are deviations from the stated goals and...Ch. 1 - Explain how managerial accountants help managers...Ch. 1 - How do the subject matter of reports and the...Ch. 1 - What is the purpose of management accounting?Ch. 1 - Who are the primary users of the information...Ch. 1 - What are the key differences between financial...Ch. 1 - Other than accounting skills, what six qualities...Ch. 1 - Explain how having more than one of the accounting...Ch. 1 - Briefly discuss the chain of command for someone...Ch. 1 - According to the information available at...Ch. 1 - According to the information on management...Ch. 1 - What other professional business organizations...Ch. 1 - How can having a bonus system based purely on...Ch. 1 - What led to the United States Congress passing the...Ch. 1 - What is an enterprise resource planning (ERP)...Ch. 1 - Describe what is meant by the term balanced in the...Ch. 1 - What is corporate social responsibility, and who...Ch. 1 - Indicate whether each statement describes...Ch. 1 - Identify the following as True or False:...Ch. 1 - Define each of these users of accounting...Ch. 1 - Discuss what information would be most useful for...Ch. 1 - Taylor Speedy has prepared the following list of...Ch. 1 - Match the term with the description:Ch. 1 - After the passage of the Sarbanes-Oxley Act in...Ch. 1 - Indicate whether each of the following statements...Ch. 1 - Match each lean business method to the best...Ch. 1 - For each of the activities listed, choose the...Ch. 1 - Look up the definitions for the following terms:...Ch. 1 - Indicate whether the statement describes reporting...Ch. 1 - Identify the following as true or false: Financial...Ch. 1 - Companies need to report both monetary and...Ch. 1 - Marvin has been thinking about the fields of...Ch. 1 - Match the term with the description.Ch. 1 - The Foreign Corrupt Practices Act (FC PA) was...Ch. 1 - Indicate whether each of the following statements...Ch. 1 - Table 1.3 shows how different areas within the...Ch. 1 - There are individuals who are under the impression...Ch. 1 - Think about the organization chart in Figure 1.7....Ch. 1 - Controversy tends to surround the topic of...
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- Why does scope creep create risk in independence? Select all that apply It can create an unfair advantage in the marketplace. It can decrease costs. It can lead to unintentionally providing a prohibited service to a restricted entity. It can cause non-compliance with KPMG policies on independence.arrow_forwardExplain the problems of adverse selection and moral hazard caused by asymmetricinformation. How can financial intermediaries alleviate those problems?arrow_forwardUnethical acts are generally committed by unethical people. What are some things companies can do to help ensure that their employees act ethically?arrow_forward
- How could the incentives of business profits create unwarranted influence in times of war?arrow_forwardCompany X sees a disruption in its supply chain at the same time it sees a decrease in customer demand. What do we know for certain?arrow_forwarda culture of greed or ethical indifference within an organization.arrow_forward
- Analyze and discuss when earnings management may be an ethical practice and when it is an unethical practice.arrow_forwardSome argue against corporate involvement in socially responsible behavior because the costs incurred by such behavior place the organization at a disadvantage in a competitive market. Discuss the merits and flaws of this argument.arrow_forwardUsing the concept of substitution and income effect, explain why means-tested transfer programs result in a strong negative incentive to work in the marketarrow_forward
- What are the disadvantages of outsourcing? (BUY)arrow_forwardWhich statement is FALSE about product-market fit? a. Even if you have product-market fit, you can lose it b. Product-market fit is not a discrete event c. Once you have product-market fit, you can ignore the competitionarrow_forwardFirms with higher ethical standards will experience a higher level of economic performance than firms with lower or poor ethical standards. Do you agree? Why or why not?arrow_forward
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