BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Life of corporation is limited by death of owner
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Stockholders have limited liability for corporate debts
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Corporation is usually managed by the owners
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Most corporations are small-or medium-sized
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Detailed explanation-1: -This is because creditors and other stakeholders could claim the investors’ and owners’ assets if the company loses more money than it has. Limited liability prevents that from occurring, so the most that can be lost is the amount invested, with any personal assets held as off-limits.
Detailed explanation-2: -Corporations have limited liability because the business is considered a distinct legal entity, separate from the owners. The company is responsible for its debts. The owners are responsible for debts ONLY up to the value of the ownership shares, and no more.
Detailed explanation-3: -A corporation is an incorporated entity designed to limit the liability of its owners (called shareholders). Generally, shareholders are not personally liable for the debts of the corporation. Creditors can only collect on their debts by going after the assets of the corporation.
Detailed explanation-4: -A Limited liability company (LLC) is a business structure that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.
Detailed explanation-5: -Limited liability means that if the company faces problems or debts, the shareholders do not risk losing their personal assets. Shareholders will not lose an amount that exceeds their initial investment. Shareholders can receive a part of the company’s profits in the form of dividends.