Which of the following best describes the fiduciary duty of financial managers of a firm?
A) Their main goal is to maximize the sales figures and increase the profits of the firm.
B) They are legally and ethically obligated to make decisions consistent with the financial interests of their firm's owners.
C) They are responsible for representing a firm's financial condition in a positive way on the annual reports.
D) Their sole duty is to come up with strategies to decrease losses and eliminate expenses for the firm.

Question

Quizplus · Accepted Answer

The fiduciary duty of financial managers of a firm is to act in the best interest of the firm's owners or shareholders. This includes making decisions that will maximize the financial returns of the firm, as well as making disclosures and providing accurate financial information to stakeholders. Option A is incorrect, as maximizing sales figures and increasing profits may not always be in the best interest of the shareholders. Option C is incorrect, as representing a firm's financial condition in a positive way may not always be accurate or ethical. Option D is incorrect, as the duty of financial managers goes beyond just minimizing losses and expenses, and includes maximizing profits and creating value for shareholders.

Which of the Following Best Describes the Fiduciary Duty of Financial