Which of the Following Principles Should a Company Follow for Effective

question 84

Multiple Choice

Which of the following principles should a company follow for effective corporate governance?

• A)The appointments to the board of directors should always be done on the basis of quid pro quo agreements.
• B)The board of directors and the CEO should work together when evaluating risk-versus-reward scenarios.
• C)The board of directors should consist solely of members who have direct connections to the company.
• D)The roles of the chairperson of the board and that of the chief executive officer should be merged.

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Definitions:

Long-Term Debt

Long-term debt is borrowing that is due for repayment more than one year in the future, often used for significant projects or investments.

Generally Accepted Accounting Principles

A framework of accounting standards, principles, and procedures that companies must adhere to when compiling their financial statements, primarily in the United States.

Verbal Commitment

An agreement or promise spoken rather than written, relying on the honor of the parties for its fulfillment.

Contract Is Signed

The formal agreement between parties becomes legally binding when all necessary signatures are affixed to the document.