Which Two of the Following Are Examples of Breaches of Fiduciary

question 46

Multiple Choice

Which two of the following are examples of breaches of fiduciary duty?

• A) A shareholder started a business that competed directly with the business.
• B) An employer charged his employees for parking after supplying it free for years.
• C) A director of a corporation, as director, learned of a good deal and took advantage of it for himself before the corporation had the opportunity to do so.
• D) The directors of the corporation, contrary to the request of the shareholder, refused to declare dividends.
• E) A promoter of a corporation sold property to the corporation for three times what he paid for it after he made full disclosure of his interest to an independent board of directors, which voted for the purchase.

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Definitions:

Cash Dividends

A distribution of a portion of a company's earnings, decided by the board of directors, paid to shareholders in cash.

Operating Activities

Activities that are directly related to the day-to-day operations of a business, generating revenue and expenses.

Comparative Balance Sheet

A financial statement presenting a company's assets, liabilities, and equity at two or more points in time for comparative purposes.

Indirect Method

A method used in cash flow statements to adjust net income for changes in non-cash accounts to calculate net cash provided by operating activities.