A Virtually Exclusive Reliance on Financial Controls May Occur When

question 87

Multiple Choice

A virtually exclusive reliance on financial controls may occur when outsider-dominated boards exist. This may lead to all of the following EXCEPT

• A)high executive turnover.
• B)increased diversification of the firm.
• C)excessive management compensation.
• D)reduction in R&D expenditure.

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Definitions:

Recognized Gain

The profit earned from the sale of an asset that must be reported for tax purposes.

Adjusted Basis

The original cost of a property adjusted for improvements, depreciation, and certain other factors, used to calculate capital gains or losses.

Fair Market Value

The price that property would sell for on the open market, often used in the context of real estate and tax assessments.

Recognized Gain

The amount of gain that is subject to tax in the year of a transaction.