In Storetrax

question 223

Multiple Choice

In Storetrax.com v. Gurland, where Gurland, the founder of Storetrax.com, was removed as president but denied severance pay and sued for that, the appeals court held that he was:

• A) not due severance pay because he was a board member and that was a conflict of interest
• B) not due severance pay because he breached his obligation to the company while an officer and board member so lost the right to such compensation
• C) due severance pay promised as other members of the board breached their duties and so would be removed from the board in favor of control being vested in Gurland
• D) due severance pay promised as other members of the board breached their obligation to follow the bylaws of the company, so they could be personally liable to Gurland
• E) none of the other choices

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Definitions:

Accounting Records

Documents and books that capture a company's financial transactions, including journals, ledgers, and financial statements.

Cash Account

An account where all transactions are made in cash, including receipts and payments.

Bank Reconciliation

Bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement, to ensure accuracy.

Internal Control

Strategies and methods adopted by a business to maintain the accuracy of its financial and accounting records, encourage responsibility, and deter dishonest practices.