What does it mean for a company to be a legal person and what does it mean for owners of a company to have limited liability? Use an example to compare the liability of owners of two companies, one with limited liability and one without limited liability.

What does it mean for a company to be a legal person and what does it mean for owners of a company to have limited liability? Use an example to compare the liability of owners of two companies, one with limited liability and one without limited liability.

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter1: Ethics Expectations

Section: Chapter Questions

Problem 14.2EC

See similar textbooks

Related questions

Q: Which of the following is false regarding a sole proprietorship? The owner has unlimited personal…

A: There are several forms of business organisation, in which businesses can be run and maintained.…

Q: When is the fair value method used for recording interest in a separate company?

A: The methods for recording interest in a separate company are as follows: Fair value method Amortized…

Q: What is the difference between private and public liability companies

A: Corporation- A corporation is a legal entity that is distinct from its owners and is formed under…

Q: What does the phrase "limited liability" mean in a corporate context?

A: Limited liability means owners liability is limited to the invested capital in the firm.

Q: In an S Corporation are the unit holders liable for busin

A: Yes, they are liable for business losses too if they fulfill these requirements.

Q: What is ‘corporate liability’. Provide examples to illustrate your answer and refer to legislation…

A: Corporate Liability is vicariously liability where the company liable for the acts of an employees…

Q: What are the possible actions when a business becomes insolvent?

A: Insolvency occurs when a person or business is unable to service the debt to lenders as debts come…

Q: Which of the these business organisations has a separate legal entity from its owner(s), and the…

A: Separate Legal entity: Separate legal entity means that business and owner are “separate for legal…

Q: Could a privately held company benefit from usingGAAP accounting, e

A: The Financial Accounting Standards Board publishes generally accepted accounting principles (GAAP),…

Q: What's a limited liability company and give one advantage and disadvantage

A: A limited liability company is a separate legal entity from their owner and it has their own common…

Q: Why isn't a single WACC applicable to all of a company's businesses?

A: WACC refers to the weighted average cost of capital. It is the sum of weights of different sources…

Q: All lawsuits in which a company has been named a defendant should be either disclosed in the…

A: Contingent liability should be recorded in the income statement when there is a probability of loss…

Q: From a tax perspective, and disregarding other issues such as limited liability, does it always make…

A: A sole proprietorship is a business owned and controlled only by one person. Because it is a…

Q: What are the similarities and differences between a limited company and a sole trader's statement of…

A: Organization- The organization is the process of identifying and gathering work to be done,…

Q: The creditors of corporations are equally liable for the debts of the firm. a. True b. Fals

A: A corporation is a entity formed under a law with limited liability and the share holders are made…

Q: conflicts that can arise when a company is owned by group of shareholders but managed by a different…

A: The shareholders are owners of the business. As per agency theory, the management act as agents on…

Q: Discuss the provisions of the Companies Act which govern the alteration of the articles of…

A: Answer : The provisions of the Companies Act governing the alteration of the Articles of Association…

Q: Corporations offer the advantage of limited liability. Explain what is meant by that statement.

A: Corporation: A business concern where there is a separate legal entity, and are owned by…

Q: e

A: Company constitution is a document outlining the rules that govern the director-shareholder…

Q: What is the personal responsibility of a owner in a private limited company?

A: Definition of Private Company A private company is a firm held under private ownership. Private…

Q: Limited liability is a disadvantage of corporation companys? true or false

A: Limited liability refers to the term that means in case of insolvency of the business, personal…

Q: Explain the operation of the contra proferentem rule. Is such a rule defensible in today’s business…

A: Contra proferentem rule: The rule of contra proferentem is a legal doctrine in contract law that…

Q: What is LIABILITY? O a. Resources owned by the company O b. Amount paid in advance OC. Business owed…

A: The term liability is an obligation .It may be short term or long term. It may also refer to the…

Q: What are the differences in whether a limited liability company is member-managed or…

A: The limited liability company is typically a new form of entity and can be managed in 2 ways namely,…

Q: Explain Limited Liability Companies?

A: INTRODUCTION:- A limited liability company (LLC) is a business structure for private companies in…

Q: d ho

A: Agency relationship : An agency connection can be understood as the fiduciary relationship in which…

Q: How would one characterize holding company? a). A company that "holds" only assets, no…

A: A holding company is a business entity—usually a corporation or limited liability company (LLC).…

Q: define contingent liability and give an example. How would you management of a company distort a…

A: Solution Concept Contingent liability Contingent liability means the liability which…

Q: Which of the following is closest to IFRS 3 Business Combinations definition of control? A company…

A: In accordance with IFRS 3, the Definition of “control” An investor controls an investee when the…

Q: If you are concerned about unlimited liability, what other types of ownership structures could you…

A: Unlimited liability implies that the personal wealth of the owner can be used for settlement of…

Q: Explain the corporate characteristic termed “no mutual agency” Explain the corporate characteristic…

A: In this question, we will explain three terms : 1) “no mutual agency” 2) limited liability 3)…

Q: What is meant by the 'Agency problem' in the context of a Public Limited Company? How is it…

A: The question is based on the concept of Financial Analysis.

Q: What are the advantages of Limited Liability Company?

A: Limited-liability Company (LLC): The form of business entity which is unincorporated, but functions…

Q: Compare the Statement of Profit or Loss and Statement of Financial Position of a sole trader with…

A: A sole trader, often known as a sole proprietorship, is a straightforward business form in which one…

Q: What is the difference between investing in a company as a shareholder vs as an employee? Are there…

A: Investing in a company as a shareholder means that the person in making an investment in the shares…

Q: Do those who are unable or unable to operate under a conventional corporation's limitations have a…

A: Here is the answer:

Q: Three advantages of forming a company The meaning of the term “limited liability”

A: A business can be done in any form – a sole proprietorship, or a partnership or forming a company.…

Q: the advantages and disadvantages of a sole trader with a company as a choice of business structure.…

A: Entity which is structured as a sole trader is one in which a single owner is responsible for all…

Q: Which accounting principle states that companies and owner should be treated as separate entities

A: A company is formed by the owner of the company but the owner is treated as separate entities and…

Q: What does GAAP mean? Why should businesses adhere to GAAP when reporting to external stakeholders?

A: The accounting is a process to identify, classify and record the transactions of the business and to…

Q: Explain how legal business entities differ in terms of the liability prot

A: Answer: Corporations and LLCs offer owners limited liability. General partners and sole proprietors…

Q: How does unlimited liability put a business owner atrisk?

A: The liability is the amount due to be paid to the outsiders by the Organizations.

Q: What areadvantges and disadvantages of the corporate form of business organazations?

A: Business organization: The organization which is established with the motive of earning profit is…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

What does it mean for a company to be a legal person and what does it mean for owners of a company to have limited liability? Use an example to compare the liability of owners of two businesses: a sole proprietor and an owner of a company with limited liability.
What are the differences in whether a limited liability company is member-managed or manager-managed? Does the election of one form of management create a difference in the fiduciary duties of members of a limited liability company? Explain your answer.
What are the similarities and differences between a limited company and a sole trader's statement of profit or loss and statement of financial position? Why is regulation important for limited companies financial statements?
How Limited liability is different to unlimited liability? Briefly explain with an example of businesses.
Explain Limited Liability Companies?
Which of the following is not a consequence of a company being a separate legal entity? A. A company has perpetual succession B. A company can sue and be sued in its own name C. A company owns property in its own name D. The management of the company is not separate from the owners
explain the legal effect of the constitution of a company
which of the which of the following statements always apply to corporations a. unlimited liability b. limited life c. ownership can be transferred without affecting operations e. managers can be fired with no effect on ownership
Which of the following is true of limited liability companies ? a) They protect the members personal assets in case of lawsuits b) They are very complex and difficult to run c) They are established for a specific project or for a limited time d) They require members to regularly hold meetings
Owners have no personal liability under which legal business structure? A. a corporation B. a partnership C. a sole proprietorship D. There is liability in every legal business structure.