Rafi, a Director of Super Service Station Corporation, Does Not

question 28

Multiple Choice

Rafi, a director of Super Service Station Corporation, does not attend a board meet?ing for three years. During that time, Twyla, Super's president, makes improper loans that cost the company $100,000. Rafi is most likely

• A) liable for negligence or mismanagement.
• B) liable for violation of the business judgment rule.
• C) not liable because missing meetings is an honest mistake.
• D) not liable because missing meetings is only poor judgment.

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Definitions:

Accounting Changes

Accounting Changes are modifications in the accounting methods, estimates, or reporting entity that affect the financial statements of a company.

Net Income

The total earnings of a company after subtracting all expenses from revenues, also known as net earnings or net profit.

Financial Statements

Documents that provide an overview of a company's financial condition, including the balance sheet, income statement, and cash flow statement.