Discuss the purposes of the "business judgment rule."
The "business judgment rule" is designed to accomplish three primary goals:
1 . It permits directors to do their job. If directors were afraid they would be liable for every decision that led to a loss, they would never make a decision, or at least not a risky one.
2 . It keeps judges out of corporate management. Shareholders would generally prefer that their investments be overseen by experienced corporate managers, not judges. Without the business judgment rule, judges would be tempted, if not required, to second-guess managers' decisions.
3 . It encourages directors to serve. No one in his right mind would serve as a director if he knew that every decision was open to attack in the courtroom. Even if the company pays the legal bills, who wants to spend years in litigation?
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Markus Company maintains a separate accounts receivable account for each customer
On June 18, Markus sells $6,400 services on account to customer Anthony and $1,000 services on account to customer Walker. How will these two transactions affect the control and subsidiary accounts? A) The control account, Accounts Receivable, will be increased with a debit of $7,400. B) The individual customer accounts in the subsidiary ledger will be increased with credits. C) After posting this sales transaction, the sum of the balances in subsidiary accounts receivable will not equal the control account balance. D) The control account will have a debit balance and the subsidiary accounts will have a credit balance. This keeps the accounting equation in balance.
Erickson Inc. is considering a capital budgeting project that has an expected return of 25% and a standard deviation of 30%. What is the project's coefficient of variation?
A. 1.20 B. 1.26 C. 1.32 D. 1.39 E. 1.46
An employee earns $5,500 per month working for an employer. The FICA tax rate for Social Security is 6.2% of the first $128,400 of earnings each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee's pay. The employee has $182 in federal income taxes withheld. The employee has voluntary deductions for health insurance of $150 and contributes $75 to a retirement plan each month. What is the amount the employer should record as payroll taxes expense for the employee for the month of January?
A. $750.75 B. $841.50 C. $464.75 D. $602.75 E. $420.75
The number of times each experimental condition is observed in a factorial design is known as
a. partition. b. replication. c. blocking. d. factor.