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Management Accounting Study Set 6

Business

Quiz 18 :

Rewards, Incentives and Risk Management

Quiz 18 :

Rewards, Incentives and Risk Management

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

Answer:

True

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Successful companies need to carefully balance management control and risk taking.
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True False
Answer:

Answer:

True

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

Answer:

C

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What type of theory provides an analytical framework for the conflicts that arise between owners and managers?
Multiple Choice
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Compensation contracts prepared to deal with the agency problem can be based on accounting and/or non-accounting measurements.
True False
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Management accountants now need to integrate the impact of external reporting rules on their risk management and internal control policies.
True False
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It is not possible to overcome the problem of remuneration bonuses having an upside bias.
True False
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Managers can reduce agency costs through the use of compensation contracts.
True False
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Agency theory is an analytical framework that tells managers how to solve potential conflicts with shareholders.
True False
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Over the last 10-15 years there has been a decline in the use of share options as a component of executive remuneration.
True False
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Reward systems at top management level are most commonly fixed payment packages.
True False
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Relative performance evaluation (RPE), in relation to incentive systems, is about the comparison of company performance, using suitable measures, against the performance of a peer group.
True False
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Research has found that in Australia in the last 10 years CEO's salaries have increased at 10 times the rate of shareholder's returns.
True False
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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.
True False
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Decentralisation typically eliminates agency costs from for-profit organisations.
True False
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To reduce agency costs, organisations implement various systems and controls to monitor behaviour, including: img
Multiple Choice
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Which of these is correct concerning agency theory? Normally the:
Multiple Choice
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Agency theory is related to accounting because organisations incur costs, including the costs to produce accounting information, to solve conflicts that might arise between managers and owners.
True False
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The main thrust of Australian government regulations concerning the payment of senior executives has been to ensure that payment is kept at a reasonable level.
True False
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Whether compensation is structured to focus on the long-term depends on two key factors, firstly, the time horizon relating to the target measure and secondly, the 'lasting' nature of the reward itself.
True False
Answer:
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