Question

In: Accounting

1-     Joan enters into a contract with Pealy believing that Pealy is acting on her own behalf...

1-     Joan enters into a contract with Pealy believing that Pealy is acting on her own behalf when in fact she is acting as an agent for Samuel on his express instructions. In the event of a breach of contract who can Joan take action against.

Pick one option

a-     No-one, the contract is invalid.

b-     Pealy.

c-     Samuel.

d-     Pealy and Samuel.


2- The stock that may be sold for any price fixed by the board of directors without regard to any part value on the stock is:

Pick one option

No part

Treasury

Par

Common or preferred

3- Treasury shares are functionally equivalent to:

Pick one option

Authorized and unissued shares

Unissued shares

Issued shares

Authorized and issued shares

4- An organization that is neither a de jure nor a de facto corporation has attempted to exercise- corporate powers. It may be treated as a corporation if
I- The other party demonstrates fair and equitable conduct.
II- Injustice can be avoided only by treating the business as a corporation.
III- A good-faith but unsuccessful effort to comply with the incorporation statute has been made.

Pick one option

II and III only.

I only.

I and II only.

I, II, and III.

Solutions

Expert Solution

1. The answer is (b) Pealy

The Joan has entered into the contract with Pealy without knowing the fact that she is acting upon instructions of Samuel. Since the John is not known about this and he has entered in contract with Pealy only, any breach of contract made by Pealy is actionable from the Joan's point of view, because the contract is entered with Pealy and not the Samuel.

2. The answer is (b) Treasury.

The stock which can be sold for any price which is fixed by the board of directors without considering any part value on such stock are to be called and treated as Treasury.

3. The answer is (a) Authorized and unissued shares.

Treasury shares are known as re-acquired stock refers to stock which is previously outstanding stock which has been bought back from shareholders by the issuing company. This results into decrease in the total number of outstanding shares in the open market. Therefore, these are treated as Authorized and Unissued stock.

4. The answer is (c) I and II only.

An organization which is neither a de jure nor a de facto corporation and has attempted to exercise its corporate powers is eligible to be treated as corporation if the other party demonstrates fair and equitable conduct and Injustice is avoidable only when the business is treated as a corporation.


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