​Elise Is a Director for Fro-Yo Inc

question 27

Multiple Choice

​Elise is a director for Fro-Yo Inc. Elise is also a director for Gelato Ice, Inc. When Fro-Yo's board considers a contract with Gelato, Elise must

• A) ​resign from Fro-Yo or Gelato.
• B) ​resign from Fro-Yo and Gelato.
• C) ​make a full disclosure of any conflict of interest.
• D) ​use her business judgment to rule on the deal.

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Definitions:

Prepaid Expenses

Expenses paid in advance for goods or services to be received in the future.

Accrued Liabilities

Liabilities recorded on a company’s balance sheet for expenses that have been incurred but not yet paid.

Accounts Payable

Accounts payable is the balance of money owed to suppliers or creditors for goods or services purchased on credit, which is typically a short-term liability.

Inventory Increase

A rise in the total value or amount of goods held by a company intended for sale or production.