The __________ Rule Allows Management Immunity from Liability for Corporate

question 34

Multiple Choice

The __________ rule allows management immunity from liability for corporate acts where there is a reasonable indication that the acts were made in good faith and with due care.

• A) sovereign immunity
• B) business judgment
• C) reasonable director
• D) good faith

---

Definitions:

Merchandising Firm

A business that purchases finished goods for resale in order to make a profit, differentiating itself from manufacturing firms and service firms.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted; a measure of profitability.

Total Cost of Goods Sold

The sum of all costs directly involved in producing or purchasing products sold by a company during a given period.