If the Board Delegates to a Committee Its Duty to Select

question 86

Multiple Choice

If the board delegates to a committee its duty to select a new company president:

• A) the members of that committee may be responsible individuals other than board members.
• B) the committee must be approved by the shareholders.
• C) the non-committee directors are relieved of liability for acts of the committee.
• D) the committee may exercise all the authority of the board.
• E) the committee must consist of board members and may be authorized unless otherwise provided by the articles of incorporation or bylaws.

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Definitions:

Double Taxation

The imposition of two separate taxes on the same asset, income, or financial transaction, often seen when corporate earnings are taxed both at the corporate level and again when distributed as dividends to shareholders.

Corporation

A legal entity recognized by law as separate from its owners, with its own rights, responsibilities, and liabilities.

Going-concern Assumption

An accounting principle that assumes a business will continue to operate indefinitely, rather than being liquidated.