CompTIA
Checkpoint
ISC
HP
Dell
EC-Council
EXIN
Fortinet
ITIL®
Juniper
PMI
Microsoft
VMware
Avaya
Google
Salesforce
Amazon
Palo Alto Networks
Certiport
ISC2
All Vendors
  2. Home
  3. Exams
  4. AICPA
  5. CPA-Business

Free CPA-Business Exam Braindumps (page: 22)

Page 22 of 132
PDF with 530 Questions

To which of the following rights is a stockholder of a public corporation entitled?

  1. The right to have annual dividends declared and paid.
  2. The right to vote for the election of officers.
  3. The right to a reasonable inspection of corporate records.
  4. The right to have the corporation issue a new class of stock.

Answer(s): C

Explanation:

Choice "c" is correct. Stockholders have a right to inspect certain corporate records.
Choice "a" is incorrect. Declaration of dividends is within the directors' discretion. There is no absolute right of shareholders to receive annual dividends.
Choice "b" is incorrect. Officers are appointed by the directors; they are not elected by the shareholders. Choice "d" is incorrect. Shareholders do not have a right to force the corporation to issue a new class of stock.



A parent corporation owned more than 90% of each class of the outstanding stock issued by a subsidiary corporation and decided to merge that subsidiary into itself. Under the Revised Model Business Corporation Act, which of the following actions must be taken?

  1. The subsidiary corporation's board of directors must pass a merger resolution.
  2. The subsidiary corporation's dissenting stockholders must be given an appraisal remedy.
  3. The parent corporation's stockholders must approve the merger.
  4. The parent corporation's dissenting stockholders must be given an appraisal remedy.

Answer(s): B

Explanation:

Choice "b" is correct. In a short form merger (one between a parent and a subsidiary 90% of which is owned by the parent), the subsidiary's shareholders have a right to dissent and take advantage of the appraisal remedy. Choice "a" is incorrect. The subsidiary's board is not required to take any action in a short-form merger.
Choice "c" is incorrect. The parent corporation's shareholders have no right to approve or disapprove a short- form merger.
Choice "d" is incorrect. The parent corporation's shareholders have no right to dissent to a short-form merger.



Davis, a director of ABC Corp., is entitled to:

  1. Serve on the board of a competing business.
  2. Take sole advantage of a business opportunity that would benefit ABC.
  3. Rely on information provided by a corporate officer.
  4. Unilaterally grant a corporate loan to one of ABC's shareholders.

Answer(s): C

Explanation:

Choice "c" is correct. As a director of the corporation, Davis may rely on information provided to him/her by a corporate officer. A corporate director is under no obligation to verify information given to him by management (corporate officers).
Choice "a" is incorrect. A director is not entitled to serve on the board of a competing business. Doing so would be a breach of fiduciary duty.
Choice "b" is incorrect. A director may not take sole advantage of a business opportunity that would benefit the corporation. Doing so would be a breach of fiduciary duty.
Choice "d" is incorrect. A director may not unilaterally grant a corporate loan to one of the corporation's shareholders. Directors generally must act through a majority vote at a directors' meeting.



Knox, president of ABC Corp., contracted with XYZ, Inc. to supply ABC's stationery on customary terms and at a cost less than that charged by any other supplier. Knox later informed ABC's board of directors that Knox was a majority stockholder in XYZ. Quick's contract with XYZ is:

  1. Void because of Knox's self-dealing.
  2. Void because the disclosure was made after execution of the contract.
  3. Valid because of Knox's full disclosure.
  4. Valid because the contract is fair to ABC.

Answer(s): D

Explanation:

Choice "d" is correct. If a corporation enters into a contract and a director has a conflict of interest in the transaction, the contract is voidable unless the director makes full disclosure of all of the facts to the disinterested directors or the shareholders, who then approve the transaction, or the director can prove that the transaction was fair to the corporation. The stationery purchase was fair to Quick, since it was purchased at a below-market price. Thus, the contract is valid.
Choice "a" is incorrect. A director's self-dealing does not automatically make a contract voiD. The contract can be upheld if it was fair.
Choice "b" is incorrect. A director's self-dealing does not automatically make a contract voiD. The contract can be upheld if it was fair.
Choice "c" is incorrect. If a corporation enters into a contract and a director has a conflict of interest in the transaction, the contract is voidable unless the director makes full disclosure of all of the facts to the disinterested directors or shareholders, who then approve the transaction, or the director can prove that the transaction was fair. Mere disclosure after the contract was adopted does not automatically render the contract valid.



Page 22 of 132



Post your Comments and Discuss AICPA CPA-Business exam with other Community members:

Venkatesh commented on September 08, 2023
I don't see Internal Control/Information technology related questions
UNITED STATES
upvote

Jay jain commented on May 25, 2023
This is nice platform
Anonymous
upvote