A Potentially Troublesome Situation Occurs When an Officer or a Director

question 53

Multiple Choice

A potentially troublesome situation occurs when an officer or a director, or a corporation in which the officer or director has an interest, enters into a transaction with the corporation. This problem is known as a(n) .

• A) conflict of authority
• B) proxy error
• C) error of judgment
• D) conflict of interest

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Definitions:

Chauffeur

A person employed to drive a passenger motor vehicle, especially a luxury vehicle such as a large sedan or limousine.

Employer

An individual or organization that hires and remunerates individuals to undertake specific roles or jobs, often providing direction and control over the work performed.

Sole Proprietorship

A business owned and operated by one individual, where there is no legal distinction between the owner and the business entity.

Corporation

A legal entity recognized by law as separate from its owners, providing limited liability and allowing it to own property, enter contracts, and sue or be sued.