The Effectiveness of the Board of Directors in Contributing to Internal

question 77

Multiple Choice

The effectiveness of the board of directors in contributing to internal control is best enhanced by which of the following?

• A) Its independence
• B) Its superiority to management
• C) Its stockholder representation
• D) Its legal power to govern the corporation

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Definitions:

Net Book Value

The value of an asset after deducting accumulated depreciation, amortization, and impairment from its original cost.

Investment Account

A financial account held at a financial institution that holds securities, cash, and other assets for investment purposes.

Goodwill

An asset without physical form that is generated when one company buys another at a price greater than the fair value of the acquired company's net assets that can be identified.

Equity Method

The equity method is an accounting technique used to record investments in associate companies, where the investment is initially recognized and subsequently adjusted for the investor's share of the net profits or losses of the investee.