Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 15

Following are a number of the key terms and concepts introduced in the chapter, along with a list of corresponding definitions. Match the appropriate letter for the key term or concept to each definition provided (items 1–8). Note that not all key terms and concepts will be used.

a. Explanatory notes to financial statements	h. Prospectus
b. Five-year summary	i. Purchase accounting
c. Significant accounting policies	j. Corporate governance
d. Stock option plan	k. Contingencies and commitments
e. Accounting change	l. Business segment
f. Business combination	m. Management’s statement of responsibility
g. Proxy

_____A plan for compensating key employees by providing the option of purchasing a company’s stock at a future date at the market price of the stock when the option is issued.

Step 1 of 2

Employee Stock Option Plan

Many a times companies offer their specified employees a right to purchase company’s certain number of shares on a future date, at a pre-determined price for a specified period of time. These options are granted to encourage employees for their productivity and also to reduce the employees’ turnover.