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An organisation delays salary payment to increase profit. Which dual effect is possible?

Answer and explanation

Correct answer: Short-term cash availability may improve, but employees’ personal objectives will be weakened

Delaying salary payments may leave cash available with the organisation for a short period, but it harms employees’ personal objectives such as income security and satisfaction. Mere delay does not increase accounting profit because the salary expense and liability still remain; it mainly affects cash flow. Option D is the opposite of the likely effect, since delayed salaries generally reduce employee satisfaction. Exam tip: Identify the balance between organisational, social and personal objectives of management.

Related tags

Management ObjectivesPersonal ObjectivesEmployee WelfareCash FlowSalary PaymentClass 12 Business StudiesObjectives Of ManagementNature And Significance Of Management

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