Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

An agency issue is most apt to develop when:

all employees are also shareholders

the management's interests do not align with those of the shareholders

the company has no outstanding debt

the company operates in a perfectly competitive market

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Verified step by step guidance

Understand the concept of agency issues: Agency issues arise when there is a conflict of interest between the management (agents) and the shareholders (principals). This typically happens when the goals of management do not align with the goals of shareholders.

Analyze the given options: Evaluate each option to determine whether it contributes to a potential misalignment of interests between management and shareholders.

Option 1: 'All employees are also shareholders' - In this case, the agency issue is less likely to develop because employees who are shareholders have a vested interest in the company's success, aligning their goals with those of other shareholders.

Option 2: 'The management's interests do not align with those of the shareholders' - This is the most likely scenario for an agency issue to develop, as it directly describes the misalignment of interests that leads to agency problems.

Option 3 and 4: 'The company has no outstanding debt' and 'The company operates in a perfectly competitive market' - These factors do not inherently create agency issues, as they do not directly affect the alignment of interests between management and shareholders.