Answered: Where management's bonuses are tied to…

Where management's bonuses are tied to profit-based performance measures, management may have an incentive not to revalue assets because?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 2Q: Is there a way to prevent managers from focusing on accounting measures as performance measures?

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Managing Agency Conflict

Conflict is defined as an act of disagreement between two parties caused by uncertainties between them. The conflict has a negative outcome that affects both parties involved in the argument. Conflict arises when the parties' thoughts do not align or go in opposite directions. Conflicts have negative consequences for both the individual and the business. As a result, it should be avoided.

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Similar questions

Why might a manager focused solely on accounting numbers miss opportunities for future benefits?
Why might a manager exhibit a behavioral tendency to inappropriately consider sunk costs in making a decision?
Managers often assume a strictly linear relationship between cost and the level of activity.Under what conditions would this be a valid or invalid assumption?
Which of the following statements is false? Multiple Choice In general, the term expense is used for managerial purposes, while the term cost refers to external financial reports. An opportunity cost is the benefit forgone by selecting one alternative over another. An outlay cost is a past, present, or future cash outflow. A cost is a sacrifice of resources.
What variable affecting gross profit should the manager focus his attention? Why?
In what way can the use of ROI as a performance measure for investment centers lead to bad decisions? How does the residual income approach overcome this problem?
what differentiates a superior investment manager from an inferior one?
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Opportunity costs represent: a) Costs avoided by making a particular decision. b) Benefits foregone. c) Costs avoided by making a particular decision. d) Cash expenditures for business opportunities.