A Derivative Action Is A(n)________

question 94

Multiple Choice

A derivative action is a(n) ________.

• A) lawsuit that a shareholder brings against an offending party on behalf of a corporation
• B) inquiry that the board of directors launches in order to analyze the ethical standards of the corporation
• C) review that officers of the corporation conduct to test the skill sets of their subordinates
• D) audit conducted by registered agents to examine the financial health of the corporation

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, crucial for calculating cost of goods sold and gross profit.

Pretax Income

The income that a company earns before tax expenses are deducted, often referred to as earnings before tax (EBT).

Understatement

The act of presenting financial figures that are lower than the actual numbers, either intentionally or unintentionally.

LIFO Reserve

The difference in inventory valuation between the Last In, First Out (LIFO) method and another inventory accounting method, such as FIFO (First In, First Out).