Alex Is a Director of ABC,Inc

question 24

Multiple Choice

Alex is a director of ABC,Inc.Alex wants to personally make a major purchase from Bravo Co.If it knew of the opportunity,ABC might be also interested in making that same purchase.Alex must

• A)advise the boards of both corporations of his conflict of interest.
• B)first offer the opportunity to make the purchase to the disinterested directors of ABC or its shareholders.
• C)resign from the board of directors.
• D)abandon the idea of making the purchase himself.

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Definitions:

Reverse Order

A sequence of objects or tasks arranged in the opposite manner from which they were initially presented or executed.

Cost Flow Assumption

An accounting method that determines the value of remaining inventory and the cost of goods sold, such as FIFO or LIFO.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some numbers more than others.