Jed Wimsey, in Auditing the Books of Various Businesses Around

question 126

Multiple Choice

Jed Wimsey, in auditing the books of various businesses around town, was talking to you, his best friend, about certain practices that he thought improper. Which of the following practices he found would be a breach of fiduciary duty?

• A) A partner of a firm that sold hospital supplies had, without the knowledge or consent of his partners, started a competing business that he ran from his own home.
• B) A director of a corporation profited $25,000 from a contract between the corporation and sellers of some property in which the director had an interest, after the director made full disclosure of his interest to the board of directors and abstained from the vote.
• C) The directors or a corporation failed to declare a dividend for the fourth year in a row.
• D) An officer of a corporation took advantage of an opportunity he learned about as an officer of the corporation, but took steps to determine that the corporation was not interested in it and received permission to do so from the board of directors.
• E) A shareholder belongs to a group that directly opposes the policy of the corporation with regard to its logging and mining operations.

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Definitions:

Organization

An entity comprising multiple people, such as a company or society, structured to achieve a particular aim or set of goals.

Verbatim Information

Information that is repeated or conveyed in exactly the same words as originally presented or spoken.

Gist

The main or essential part of a matter; the core idea or summary of information.

Elaboration

The process of adding more detail or information to something, often to clarify or enhance understanding.