Question 2 (25 marks) Define the agency problem and illustrate for what reasons (if any) it...

Question 2

Define the agency problem and illustrate for what reasons (if any) it might arise in each of the following types of business:

sole proprietorships
general partnerships
private limited companies
public limited companies.

Expert Solution

Agency problem is defined as a situation in whicn an agent of an organisation use their authority for their own benefit rather than that of the pricipals.

Reason of agency problem in case of following types of business:

i)Sole proprietorships:Agency problem arises when there is separation of ownership and management of a business.In case of sole proprietorship,such separtion does not exist,thus there is no agency problem in sole proprietorship.

ii)In case of partnership ,agency problem arises when there is not sufficient incentives are given to the managers to encourage them to work in best interest of pricipals.

iii)Private limited companies:In case of private limited companies,the agency problem arises due to the issue with incentive and presence of discretion in task completion.

iv)In case of public limited companies,the agent has better information than the pricipal(Shareholders) about the relevant fact of the transaction.The principal is normally not in the position to ensure that the agent's performance was indeed in the best interest of the pricipal.

jeff jeffy answered 1 year ago

Define: primary & secondary infection. [3 marks] Provide a specific example to illustrate this. [2 marks]

QUESTION 2 (25 Marks: 45 minutes) 2.1 Answer the following questions: a) Define current liabilities (2...

QUESTION 2 (25 Marks: 45 minutes) 2.1 Answer the following questions: a) Define current liabilities b) Define current assets c) In which sequence should notes to the financial statements be presented? d) Discuss the identification of financial statements as noted in IAS 1. e) Discuss consistency of presentation as a general feature of financial statements. f) Discuss materiality and aggregation as a general feature of financial statements. 2.2 You are provided with the following statement of financial position of Brabham...

Problem 1 (4+3 marks). (a) Illustrate how the list 5, 13, 2, 25, 7, 17, 20,...

Problem 1 (4+3 marks). (a) Illustrate how the list 5, 13, 2, 25, 7, 17, 20, 8, 4 is sorted with Mergesort. Count the number of comparisons made. (b) Illustrate how the list 5, 13, 2, 25, 7, 17, 20, 8, 4 is sorted with Heapsort.

QUESTION 2 (25 MARKS) As you make financial decision, elaborate any FIVE (5) types of risk...

QUESTION 2 As you make financial decision, elaborate any FIVE (5) types of risk that you encounter that affect your investment strategy during Movement Control Order 2020.

Define an agency relationship. What major agency problem do corporations encounter? What can be done to...

Define an agency relationship. What major agency problem do corporations encounter? What can be done to help minimize this problem?

QUESTION ONE a) Define the following: i. Statistics [2 Marks] ii. Probability [2 Marks] b) Road...

QUESTION ONE a) Define the following: i. Statistics [2 Marks] ii. Probability [2 Marks] b) Road Safety said that it would commence the enforcement of Safety Laws from Wednesday, 11th July 2018 as part of the Road Safety Management System. The Head of Public Relations, said that the programme would include the introduction of roadside cameras to monitor and detect traffic offences. The following is a frequency distribution of speeds for a sample of 475 vehicles which were scanned by...

Question 2 (25 marks) (a) A project in South Korea requires an initial investment of 2...

Question 2 (a) A project in South Korea requires an initial investment of 2 billion South Korean won. The project is expected to generate net cash flows to the subsidiary of 3 billion and 4 billion won in the 2 years of operation, respectively. The project has no salvage value. The current value of the won is 1,100 won per U.S. dollar, and the value of the won is expected to remain constant over the next 2 years. (i). What...

QUESTION 2 (25 MARKS) The following are the statements of financial position as at 31 December...

QUESTION 2 The following are the statements of financial position as at 31 December 2019 Keris RM'000 Tombak RM'000 Meriam RM'000 Ordinary share capital 14400 8000 1280 Retained profit 480 576 400 Profit for the year 960 512 1120 Dividend paid (160) Loan from tombak 320 Overdraft 160 288 Traade payables 560 192 160 16560 9568 3120 Land 1280 3360 1424 Building 2880 3200 960 Plant and machinery 3440 1440 512 Investment in tombak 7200 Investment in Meriam 1600 Loan...

QUESTION 2 [25 MARKS] The following is a statement of Financial Position of a Company X...

QUESTION 2 [25 MARKS] The following is a statement of Financial Position of a Company X as at 31 December: P ASSETS Non-Current Assets Land and Buildings 120,000 Plant And Machinery 250,000 Total Non-Current Assets 370,000 Current Assets Stock 170,000 Debtors 90,000 Cash At Bank 30,000 290,000 Total Assets 660,000 EQUITY & LIABILITIES Equity Share Capital 260,000 Retained Earnings 20,000 280,000 Long Term Liabilities 20% Debentures 300,000 Current Liabilities Sundry Creditors 80,000 Total Equity & Liabilities 660,000 Additional Information: ...

Question 2 25 Marks Kavango Ltd is considering investing in a project at a cost of...

Question 2 25 Marks Kavango Ltd is considering investing in a project at a cost of N$3 000 000. The estimated economic life of the project is 5 years. The company will use the straight-line method to depreciate the cost of the project over 5 years. The company estimates that sales will amount to 240 000 units per year at an estimated selling price of N$40 per unit. The company expects to incur fixed overheads, excluding depreciation of N$300 000...

Question