Asked by Daniel Klucker on Jun 25, 2024
Verified
Limited liability of shareholders means
A) dividends will be paid regardless of net income.
B) creditors have no legal claim on a shareholder's personal assets.
C) the life of the corporation is limited.
D) deferral or reduction of taxes.
Limited Liability
A legal structure that limits the financial liability of investors or owners to the amount they have invested in a company.
Shareholders
Individuals or entities that own one or more shares of stock in a corporation, giving them rights to dividends and a say in company matters through voting.
Creditors
Individuals or institutions to whom money is owed by the debtor for provided goods, services, or loans.
- Identify characteristics and rights associated with corporate ownership, including liability, transferability, and implications of share transactions.
Verified Answer
SJ
srajan jaiswalJun 29, 2024
Final Answer :
B
Explanation :
Limited liability means that shareholders are not personally responsible for the company's debts and liabilities beyond the amount they have invested in the company. This protects their personal assets from being used to satisfy corporate debts and liabilities.
Learning Objectives
- Identify characteristics and rights associated with corporate ownership, including liability, transferability, and implications of share transactions.