Few topics in the business press grab headlines and ignite the public like the compensation packages received by top management, which continue to rise. 125 CEOs in Canada’s 100 largest companies earned a median compensation of $5.6-million in 2013, a level of compensation just under that received before the economic downturn. How do compensation committees set executive compensation? In many cases, it comes down to equity theory and depends on the referent others to which the CEO is compared. To determine a “fair” level of pay for a given CEO, members of a compensation board find out how much CEOs with similar levels of experience in similar firms (similar inputs) are being paid and attempt to adjust compensation (outcomes) to be similar. So, CEOs in large tech firms are paid similarly to CEOs in other large tech firms, CEOs in small marketing companies are paid similarly to CEOs in other small marketing companies, and so forth. Proponents of this practice consider it to be “fair” because it achieves equity. However, critics of high CEO pay want to change the perspective by comparing the CEO’s pay to the pay of the average employee. For example, Canada’s 100 highest paid CEOs are paid 171 times more than the average employee. From this perspective, CEO pay is grossly inequitable and thus “unfair.” In response, many CEOs, such as Mark Zuckerberg of Facebook and Larry Page of Google, have taken $1 annual salaries, though they still earn substantial compensation by exercising their stock options. In addition, shareholders of some companies, such as Verizon, are playing a greater role in setting CEO compensation by reducing awards when the company underperforms. 1. How does the executive compensation issue relate to equity theory? Who do you think should be the comparative others in these equity judgments? How should we determine what is a “fair” level of pay for top executives? 2. Can you think of procedural justice implications related to the ways pay policies for top executives have been instituted? Do these pay-making decisions follow the procedural justice principles outlined in the chapter?
> Why would managers create a boundaryless organization?
> What is personality? How do we typically measure it? What factors determine personality?
> What is attribution theory? What are the three determinants of attribution? What are the implications of attribution theory for explaining organizational behavior?
> What is perception, and what factors influence our perception?
> What is power?
> What are some strategies for emotion regulation and their likely effects?
> One of the members of your team continually arrives late for meetings and does not turn drafts of assignments in on time. Choose one of the available theories and indicate how the theory explains the member’s current behaviour and how the theory could be
> These scenarios are based on studies of corporate social responsibility (CSR) practices that show consumers generally charge a kind of rent to companies that do not practice CSR. In other words, they generally expect a substantial discount in order to bu
> Agreeable people tend to be kinder and more accommodating in social situations, which you might think could add to their success in life. 184 However, one downside of agreeableness is potentially lower earnings. Recent research has shown the answer to th
> It was not long ago that products from Apple, perhaps the most recognizable name in electronics manufacturing around the world, were made entirely in the United States. 50 This is not so anymore. Now, almost all of the approximately 70 million iPhones, 3
> If you were either a board member or a parent, how would you know that the employees taking care of your children were unhappy with their jobs?
> In what ways does this case illustrate that knowledge of OB can be applied beyond your own workplace?
> What are the characteristics of a virtual organization?
> What might Rogers have done differently as president of the board?
> What might you do if you learned about their unhappiness?
> What standards can you use to determine whether a political action is ethical?
> What potential problems underlie cross-cultural communication? How can they be overcome?
> What are the differences between formal small-group networks and the grapevine?
> What are the differences among downward, upward, and lateral communication?
> Do you think either party behaved unethically in this case?
> What are some common barriers to effective communication?
> How does channel richness underlie the choice of communication?
> What are the key parts of the communication process, and how do you distinguish formal from informal communication?
> What are the three key elements of motivation?
> What is the essence of what we know about motivating employees?
> What are some of the ethical issues with motivation theories?
> How do the predictions of self-determination theory apply to intrinsic and extrinsic rewards?
> How is organizational justice a refinement of equity theory?
> Why do equity and fairness matter in the workplace?
> What are the key principles of goal-setting theory, self-efficacy theory, and reinforcement theory?
> Drawing on Kotter’s eight-step plan for implementing change, how might the station have handled its planned change differently?
> What are the key tenets of expectancy theory?
> What are some early theories of motivation? How applicable are they today?
> What are the implications of diversity for group effectiveness?
> What are the five types of teams?
> What kind of workplace would be most suitable for the values that you hold most closely?
> Paul Fromm is a high school teacher employed in one of the most ethnically diverse school districts in Canada. 175 He is an excellent teacher, and receives high ratings from his students. During weekends and summer holidays, when he is not working, he pa
> What is organizational behavior (OB)?
> What is the difference between Rokeach’s terminal and instrumental values?
> What are the benefits of cultural intelligence?
> How do organizations manage diversity effectively?
> If you shared Devereaux’s views, would you have handled the situation differently? How?
> What are the four employee responses to job dissatisfaction?
> What outcomes does job satisfaction influence? What implications do the consequences of job satisfaction have for management?
> What causes job satisfaction? For most people, is pay or the work itself more important?
> What are the key attitudes that affect organizational performance? In what ways are these attitudes alike? What is unique about each?
> What are the three components of an attitude? Are these components related or unrelated?
> What are the values that are unique to Canadian culture?
> What are Hofstede’s value dimensions for assessing cultures?
> What workplace challenges provide opportunities to apply OB concepts?
> Why do few absolutes apply to OB?
> Why do organizational structures differ, and what is the difference between a mechanistic structure and an organic structure?
> What are the forces for change?
> Using the data in BE3-5, journalize and post the entry on July 1 and the adjusting entry on December 31 for Randle Insurance Co. Randle uses the accounts Unearned Insurance Revenue and Insurance Revenue. Reference Data BE 3-5: On July 1, 2010, Spahn Co.
> On July 1, 2010, Spahn Co. pays $18,000 to Randle Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Spahn Co., journalize and post the entry on July 1 and the adjusting entry on December 31.
> At the end of its first year, the trial balance of Denton Company shows Equipment $30,000 and zero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciation for the year is estimated to be $5,000. Prepare the adjusting entry f
> Windsor Advertising Company’s trial balance at December 31 shows Advertising Supplies $6,700 and Advertising Supplies Expense $0. On December 31, there are $2,700 of supplies on hand. Prepare the adjusting entry at December 31, and using T accounts, ente
> Conan Industries collected $100,000 from customers in 2010. Of the amount collected, $25,000 was from revenue earned on account in 2009. In addition, Conan earned $40,000 of revenue in 2010, which will not be collected until 2011. Conan Industries also p
> An inexperienced bookkeeper prepared the following trial balance. Prepare a correct trial balance, assuming all account balances are normal. KWUN COMPANY Trial Balance December 31, 2010 Debit Credit Cash $14,800 $3,500 3,000 Prepaid Insurance Account
> At the beginning of the year, Hernandez Company had total assets of $800,000 and total liabilities of $500,000. Answer the following questions. (a) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what is the am
> From the ledger balances given below, prepare a trial balance for the Cleland Company at June 30, 2010. List the accounts in the order shown on page 61 of the text. All account balances are normal. Accounts Payable $9,000, Cash $8,800, Cleland, Capital $
> Given the accounting equation, answer each of the following questions. (a) The liabilities of McGlone Company are $120,000 and the owner’s equity is $232,000. What is the amount of McGlone Company’s total assets? (b) The total assets of Company are $190,
> Presented below is the basic accounting equation. Determine the missing amounts. Liabilities Owner's Equity Assets $50,000 (a) $90,000 (b) ? $70,000 $60,000 ? $40,000 (c) $94,000 +
> Summarized operations for J. R. Ross Co. for the month of July are as follows. Revenues earned: for cash $20,000; on account $70,000. Expenses incurred: for cash $26,000; on account $40,000. Indicate for J. R. Ross Co. (a) the total revenues, (b) the tot
> Garcia Enterprises had a capital balance of $168,000 at the beginning of the period. At the end of the accounting period, the capital balance was $198,000. (a) Assuming no additional investment or withdrawals during the period, what is the net income for
> Journalize the following business transactions. (a) Hector Molina invests $9,000 cash in the business. (b) Insurance of $800 is paid for the year. (c) Supplies of $2,000 are purchased on account. (d) Cash of $7,500 is received for services rendered.
> Reese Co. has sales revenue of $105,000, cost of goods sold of $70,000, and operating expenses of $20,000.What is its gross profit and its gross profit rate?
> Prepare the closing entries for the Sales account, assuming a balance of $200,000 and the Cost of Goods Sold account with a $145,000 balance.
> A credit sale is made on July 10 for $900, terms 2/10, n/30. On July 12, $100 of goods are returned for credit. Give the journal entry on July 19 to record the receipt of the balance due within the discount period.
> Gary Cunningham is uncertain about the control features of a bank account. Explain the control benefits of (a) a check and (b) a bank statement.
> The cash register tape for Leprechaun Industries reported sales of $6,891.56. Record the journal entry that would be necessary for each of the following situations: (a) Cash to be accounted for exceeds cash on hand by $50.75. (b) Cash on hand exceeds cas
> Using the data in BE2-5, journalize the transactions. (You may omit explanations.) Reference Data from BE 2-5: T. J. Carlin has the following transactions during August of the current year. Indicate (a) the effect on the accounting equation and (b) the
> Goods costing $2,000 are purchased on account on July 15 with credit terms of 2/10, n/30. On July 18 a $200 credit memo is received from the supplier for damaged goods. Give the journal entry on July 24 to record payment of the balance due within the dis
> The balance sheet debit column of the worksheet for Diaz Company includes the following accounts: Accounts Receivable $12,500; Prepaid Insurance $3,600; Cash $15,400; Supplies $5,200, and Short-term Investments $6,700. Prepare the current assets section
> At Batavia Company, the following errors were discovered after the transactions had been journalized and posted. Prepare the correcting entries. 1. A collection on account from a customer for $780 was recorded as a debit to Cash $780 and a credit to Serv
> The ledger of Swann Company contains the following balances: D. Swann, Capital $30,000; D. Swann, Drawing $2,000; Service Revenue $50,000; Salaries Expense $27,000; and Supplies Expense $4,000. Prepare the closing entries at December 31.
> Colin Mochrie Company has the following balances in selected accounts on December 31, 2010. Consulting Revenue………………$40,000 Insurance Expense……………………2,100 Supplies Expense……………………. 2,450 All the accounts have normal balances. Colin Mochrie Company debits
> Duncan Company records all prepayments in income statement accounts. At April 30, the trial balance shows Supplies Expense $2,800, Service Revenue $9,200, and zero balances in related balance sheet accounts. Prepare the adjusting entries at April 30 assu
> Partial adjusted trial balance data for Harmony Company is presented in BE3-9. The balance in S. Harmony, Capital is the balance as of January 1. Prepare an owner’s equity statement for the year assuming net income is $10,600 for the year.
> The income statement of Benning Co. for the month of July shows net income of $1,400 based on Service Revenue $5,500, Wages Expense $2,300, Supplies Expense $1,200, and Utilities Expense $600. In reviewing the statement, you discover the following. 1. In
> The adjusted trial balance of Harmony Company at December 31, 2010, includes the following accounts: S. Harmony, Capital $15,600; S. Harmony, Drawing $6,000; Service Revenue $35,400; Salaries Expense $16,000; Insurance Expense $2,000; Rent Expense $4,000
> The bookkeeper for Oglesby Company asks you to prepare the following accrued adjusting entries at December 31. 1. Interest on notes payable of $400 is accrued. 2. Services provided but not recorded total $1,500. 3. Salaries earned by employees of $900 ha
> Using the data in BE2-2, journalize the transactions. (You may omit explanations.) Reference Data from BE 2-2: Transactions for the Hank Norris Company for the month of June are presented below. Identify the accounts to be debited and credited for each
> The management of Hoyt Corp. is considering the effects of various inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) provide the
> Boarders sells a snowboard, Xpert that is popular with snowboard enthusiasts. Below is information relating to Boarders’s purchases of Xpert snowboards during September. During the same month, 121 Xpert snowboards were sold. Boarders us
> Data for Quirk Company are presented in BE6-3. Compute the cost of the ending inventory under the average-cost method, assuming there are 360 units on hand. Exercise 6-3: In its first month of operations, Quirk Company made three purchases of merchandis
> In its first month of operations, Quirk Company made three purchases of merchandise in the following sequence: (1) 300 units at $6, (2) 400 units at $7, and (3) 200 units at $8. Assuming there are 360 units on hand, compute the cost of the ending inve
> On December 1, Bargain Electronics Ltd. has three DVD players left in stock. All are identical, all are priced to sell at $150. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $100. Another, with serial
> Kale Thompson, an auditor with Sneed CPAs, is performing a review of Strawser Company’s inventory account. Strawser did not have a good year and top management is under pressure to boost reported income. According to its records, the inventory balance at
> The ledger of Gomez Company includes the following items: (a) Freight-in, (b) Purchase Returns and Allowances, (c) Purchases, (d) Sales Discounts, (e) Purchase Discounts. Identify which items are included in goods available for sale.
> Smart Company identifies the following items for possible inclusion in the taking of a physical inventory. Indicate whether each item should be included or excluded from the inventory taking. (a) Goods shipped on consignment by Smart to another company.
> Premier Bank and Trust is considering giving Lima Company a loan. Before doing so, they decide that further discussions with Lima’s accountant may be desirable. One area of particular concern is the inventory account, which has a year-end balance of $297
> Karen Sommers Travel Agency purchased land for $90,000 cash on December 10, 2010. At December 31, 2010, the land’s value has increased to $93,000. What amount should be reported for land on Karen Sommers’s balance sheet at December 31, 2010? Explain.
> An analysis of the transactions made by S. Moses & Co., a certified public accounting firm, for the month of August is shown below. The expenses were $650 for rent, $4,900 for salaries, and $500 for utilities. Instructions (a) Describe each transact
> In its income statement for the year ended December 31, 2010, Pele Company reported the following condensed data. Operating expenses $ 925,000 Interest revenue $ 28,000 Cost of goods sold 1,289,000 Loss on sale of equipment 10,000 Interest expense
> Assume that Alshare Company uses a periodic inventory system and has these account balances: Purchases $450,000; Purchase Returns and Allowances $11,000; Purchase Discounts $8,000; and Freight-in $16,000. Determine net purchases and cost of goods purchas
> Presented below is information for Obley Company for the month of March 2010. Instructions (a) Prepare a multiple-step income statement. (b) Compute the gross profit rate. $212,000 $ 32,000 Cost of goods sold Freight-out Insurance expense Salary exp
> Assume Baja Company has the following reported amounts: Sales $510,000, Sales returns and allowances $15,000, Cost of goods sold $350,000, Operating expenses $110,000. Compute the following: (a) net sales, (b) gross profit, (c) income from operations,
> Explain where each of the following items would appear on (1) a multiple step income statement, and on (2) a single-step income statement: (a) gain on sale of equipment, (b) interest expense, (c) casualty loss from vandalism, and (d) cost of goods sold
> Presented is information related to Rogers Co. for the month of January 2010. Instructions (a) Prepare the necessary adjusting entry for inventory. (b) Prepare the necessary closing entries. $ 12,000 Ending inventory per perpetual records Ending inv
