- 1 Marks
BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society
Identify the item that is NOT considered an agency cost.
Question
Agency costs are the costs that the shareholders incur when professional managers run their company. Which of the following is NOT part of agency costs?
A. Costs of auditing accounts of the company
B. Remuneration paid to managers of the company
C. Cash bonuses paid to managers for meeting specified targets
D. Costs incurred paying too much for the acquisition of a subsidiary
E. Award of free shares to management of the company
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