Smith, Jones, and Brown Incorporated XYZ Ltd

question 34

Multiple Choice

Smith, Jones, and Brown incorporated XYZ Ltd. The three were sole shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the business, but they disliked his personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and employee and raised their own salaries as employees. They then voted Smith out as a director at the next shareholders' meeting. Which one of the following provisions would aid Smith?

• A) Relief-from-oppression provisions
• B) Pre-emptive right provisions
• C) Indoor-management rule
• D) Derivative-action provisions
• E) Dissent procedures

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Definitions:

Sales Volume

The total number of units or products sold within a specific period.

Fixed Expense

Overheads that stay the same, no matter how much is produced or sold, encompassing charges such as property rent, staff paychecks, and insurance coverage costs.

Break-Even

Break-even refers to the point at which total costs and total revenues are exactly equal, resulting in neither profit nor loss.

Variable Expense

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.