Managers Whose Bonuses Are Based on the Income of the Firm

Multiple Choice

Managers whose bonuses are based on the income of the firm tend to overstate the value of accounts receivable and inventory with the following result:

A) the firm's value is less than it is held out to be.
B) profit is more than it is held out to be.
C) the firm's value is more than it is held out to be.
D) liabilities are less than they are held out to be.