The Business Judgment Rule Is Important Because It Reflects the Principle

question 18

Multiple Choice

The business judgment rule is important because it reflects the principle that ______, not ______, have the greatest latitude to run companies.

• A)shareholders; company directors
• B)company directors; shareholders
• C)managers; company directors
• D)shareholders; managers

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Definitions:

Balance Sheet

A balance sheet is a financial statement that showcases an organization's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

U.S. Dollars

The official currency of the United States, widely used as a benchmark and standard for international financial transactions.

Translation Adjustment

An accounting entry that arises when converting financial statements of foreign subsidiaries into the parent company's reporting currency, affecting comprehensive income.

Functional Currency

The currency of the primary economic environment in which an entity operates, generally the currency in which it primarily generates and expends cash.