The Board of Directors Is Essential for Effective Corporate Governance

question 9

Multiple Choice

The board of directors is essential for effective corporate governance because it has ultimate responsibility to

• A)make sure management implements proper internal control and financial reporting processes.
• B)assist management in the preparation of the financial statements.
• C)test internal controls and ensure they are working properly.
• D)provide a report to the auditor confirming that internal controls are working properly.

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Definitions:

Depreciation

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to use and wear and tear.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income.

Deferred Tax Asset

A financial statement item that represents an entity's right to reduce future tax payments due to temporary differences or certain carryover losses.

Deferred Tax Liability

A tax obligation recognized in the financial statements representing taxes that are owed but not yet paid.