Which of the Following Is an Example of a Breach

question 88

Multiple Choice

Which of the following is an example of a breach of a fiduciary duty?

• A) A shareholder of ABC Ltd., a trucking corporation whose shares are listed on the Vancouver Stock Exchange, is working as an employee for ABC Ltd.'s competitor, Jonstone Trucking.
• B) The directors of the corporation, contrary to the request by the shareholders, refused to declare dividends.
• C) A partner in a firm learned of a business forced to sell some heavy equipment. Although the partnership could have used the equipment, he bought and sold it at a substantial profit before the partnership was given a chance to buy it.
• D) A promoter of a corporation sold property to the corporation for four times what he paid for it after he made full disclosure of his interest to an independent board of directors, which voted for the purchase.
• E) A shareholder of a corporation voted in favour of an acquisition by the corporation at the annual general meeting because he secretly had an interest in the corporation being purchased.

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Definitions:

Predetermined Overhead Rate

A calculated rate used to allocate manufacturing overhead costs to products or job orders, based on a projected level of activity.

Direct Labor-Hours

The total number of labor hours worked by employees who are directly involved in the manufacturing process.

Job-Order Costing System

An accounting system that accumulates costs per job rather than per time period, used in industries where goods are custom-made.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a certain activity.