When a Director Has a Duty to Acquire Property for the Corporation

question 51

Multiple Choice

When a director has a duty to acquire property for the corporation and instead acquires it for herself,she has

• A)intercepted an opportunity belonging to the corporation and has committed a breach of duty.
• B)an obligation to immediately disclose the acquisition of the property to the shareholders.
• C)no obligation to disclose and has not committed any breach of duty.
• D)breached her obligation not to compete with the corporation.

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Definitions:

Absorption Costing

A costing method where all manufacturing costs, both fixed and variable, are assigned to units of production and are absorbed by those units.

Variable Costing

An accounting method that includes only variable production costs—such as materials, labor, and overhead—in the cost of goods sold, while fixed costs are expensed in the period they are incurred.

Fixed Overhead Cost

Costs that do not vary with production volume, such as rent, salaries, and insurance, and must be paid regardless of the level of output or sales.

Ending Inventory

The value of goods available for sale at the end of an accounting period, which will be carried over as the beginning inventory for the next period.