Fact Pattern 24-2

question 48

Multiple Choice

Fact Pattern 24-2
Bertram, Claudia, and Dynah form Eat Local, Inc., a closely held corporation, and agree to restrict the transfer of its stock to anyone else. The agreement provides that if one of the shareholders dies, his or her shares of stock in Eat Local will be divided to maintain the proportionate control of the survivors.
-Refer to Fact Pattern 24-2.Later,Bertram dies.With respect to the stock transfer restriction agreement,Bertram's death most likely

• A)triggers the division provision.
• B)invalidates the entire agreement.
• C)voids the division provision only.
• D)violates the entire agreement.

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Definitions:

Merchandise Sold

The total quantity of goods that have been sold by a business within a particular period.

Understated Inventory

A situation where the recorded amount of inventory is less than the actual inventory on hand, leading to distorted financial statements.

Net Income

The company's total earnings following the deduction of all costs, taxes, and expenses from the overall revenue.

Inventory Management

The overseeing and controlling of the ordering, storage, and use of components that a company will use in the production of the items it will sell as well as the managing of quantities of finished products for sale.