Which of the following mechanisms helps to align management interests with those
ID: 2632398 • Letter: W
Question
Which of the following mechanisms helps to align management interests with those of shareholders?
a.
A well designed compensation package.
b.
An efficient managerial labor market.
c.
The Sarbanes-Oxley Act of 2002.
d.
All of the above.
______ 2. Assume the pre-tax profit of $50,000 has been earned by a business, and the owner/proprietor wants to withdraw all of the after-tax profit for personal use. Assume the tax rate for a C corporation is 33%, while the rate for a person is 25%. The after-tax earnings available under the corporate and proprietorship forms of business are:
a.
for a corporation, $25,125; for a proprietorship, $37,500.
b.
for a corporation, $24,090; for a proprietorship, $36,500.
c.
for either a corporation or a proprietorship, $36,500.
d.
for either a corporation or a proprietorship, $24,090.
______ 3. Galan Associates prepared its financial statements for 2013 based on the information below.
The company had cash of $1,350, inventory of $12,480, and accounts receivables
of $6,589. The company
a.
A well designed compensation package.
b.
An efficient managerial labor market.
c.
The Sarbanes-Oxley Act of 2002.
d.
All of the above.
Explanation / Answer
1. A
2. C
3. C
4. A
5. D
6.B
7.B
8.A
9.D
10.C
11.C
12.B
13. D
14.A
15.A
16. C
17.B
18. C
19. A
20 .D
21. A
22.C
23. A
24. D
25. C
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