How Can the Following Quotation Best Be Explained: "Stockholders Control

question 87

Multiple Choice

How can the following quotation best be explained: "Stockholders control the activities of a corporation"?

• A) All stockholders vote on all the major issues and problems that a company faces on a monthly basis.
• B) Stockholders are intricately involved in the daily operations of a corporation.
• C) Stockholders elect the board of directors, and this board is responsible for appointing corporate officers who manage the daily business of the corporation.
• D) Stockholders vote for the members of the board of directors, and this board makes all the daily business decisions for the corporation.
• E) Stockholders usually call company management and tell executives better ways to run the organization.

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Definitions:

Tax Laws

Regulations imposed by governmental agencies in relation to the calculation and payment of taxes by individuals and organizations.

Deferred Tax Liability

A tax obligation that arises when there are temporary differences between the book value and the tax value of assets and liabilities.

Deferred Tax Asset

A Deferred Tax Asset arises when a company pays more tax to the government than it owes in its financial statements, which can be used to reduce tax liability in future periods.

Adjusted

Refers to the modification of financial statements to provide a more accurate picture by removing the effects of non-recurring transactions or events.