Activities such as competitor analysis and market research are valuable investments of time that do not generate revenue. Which of the following components of a compensation plan is best suitable for encouraging such activities?
A) salary
B) commission
C) bonus
D) incentive payment
A
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Disadvantages of using the retrospective application method do not include which of the following?
A) Numbers must be changed on previously released financial statements. B) The cost of determining the effect of the change may be greater than the benefits obtained from the increase in comparability. C) It has possible impacts on contractual arrangements. D) All financial statements consistently apply the same revenue recognition principles.
Identify the true statement about ethics based on rights.
A. Application of theory to real-life situations is easy. B. There is no agreement on the scope and range of rights. C. There exists a well-defined line between rights and desires. D. Rights and duties can be easily defined.
On January 1, Year 1, Eller Company purchased an asset that had cost $24,000. The asset had an 8-year useful life and an estimated salvage value of $1,000. Eller depreciates its assets on the straight-line basis. On January 1, Year 5, the company spent $6,000 to improve the quality of the asset. How does the Year 5 depreciation expense impact the elements of the financial statements?
A. Increase stockholders' equity by $4,625 B. Decrease stockholders' equity by $4,375 C. Decrease total assets by $4,625 D. Increase total assets by $4,375
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