Kent Incorporated Dynamite Data Ltd

question 169

Multiple Choice

Kent incorporated Dynamite Data Ltd.,which worked with small businesses in developing graphs and charts from their data for presentations to bankers,shareholders,etc.Kent loaned the company $25 000 by way of a shareholder's loan and took as security computers,plotters,and printers under a chattel mortgage document.An employee of the corporation,Jack,while delivering some graphs to a customer,Roth,got into an argument with Roth,who complained that the graph was in red and not in pink as requested.It ended with Jack punching Roth,who fell onto a microscopic camera.The damage to Roth's nose and the camera totalled $35 000.Which of the following is true?

• A)The corporation is not liable for the damage caused by the action of its employee,Jack.
• B)If the corporation went bankrupt but owed creditors (other than Roth),Kent would be in a worse position than unsecured creditors to collect proceeds realized from the sale of the corporation's assets.
• C)Kent is liable for the damage to Roth and the camera if neither Jack nor the employer/corporation has sufficient funds.
• D)Roth's action against Jack is for the tort of assault.
• E)Even if Kent,the only shareholder,died,the corporation would not die and would still owe its outstanding debts.

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Definitions:

Cost of Goods Sold

This accounting term refers to the direct costs attributable to the production of the goods sold by a company, including labor, material, and overhead costs.

Rising Prices

A situation in which the general level of prices for goods and services in an economy increases over a period, often referred to as inflation.

Inventory Method

A system used by businesses to keep track of the quantity, status, and location of goods that they hold.

Gross Profit

The financial metric calculated by subtracting the cost of goods sold from sales revenue, indicating the efficiency of a company in managing its production and labor costs.