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 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.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter2: Introduction To Financial Statements

Section: Chapter Questions

Problem 7MC: Owners have no personal liability under which legal business structure? A. a corporation B. a...

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: 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 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 type of business organization provides the least amount of protection forbankers and other…

A: Corporation: Corporation is the form of organization that has legal existence that is owned and…

Q: your own research and critically examine the concepts of small proprietary company, large…

A: Proprietary company: A proprietary company can be defined as a private company which can be either…

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: Discuss the three major legal forms of business organisation available to businesses together with…

A: The three basic forms of business organizations: Sole proprietorship: This form of business is…

Q: a) What an associate is and explain the accounting requirements relating to having an associate and…

A: Companies invest money into another company and that company in which the investment is made becomes…

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: Evaluate the similarities and differences between trusts and corporations. In an attempt to protect…

A: A legal entity acting as an agent of the individual or entity just to manage the assets and transfer…

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: Does the election of one form of management create a difference in the fiduciary duties of members…

A: Limited liability Company: Limited Liability Company refers to a business structure where the owners…

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: What does it mean for a company to be a legal person and what does it mean for owners of a company…

A: A company refers to a voluntary association that is formed and organized by a group of people who…

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: Which type of business structure requires that all shareholders be licensed? Question 1 options: a)…

A: A corporation is a separate legal entity created under the eyes of the law, i.e., a formal…

Q: 1) What does the phrase ‘company limited’ means in a business name? 2)Explain why a sole trader…

A: A business entity having its name ending with company means that the company and the owners are…

Q: 4. Which of the following is not an advantage of the corporate form of business organization? A.…

A: Lets understand the basics. Corporate form of organizations are different as compare to sole trade…

Q: Should companies retain dividends in the firm to protect employment and investments?

A: Retaining dividend is a part of the profit that is not given to the shareholder in fact it is held…

Q: What are the advantages of operating a business as a partnership rather than as a corporation? What…

A: Describe the advantages and dis-advantages of operating a business as a partnership rather than as a…

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: Of the following forms of business organization, which have stockholders with limited liability? a)…

A: SOLUTION- A CORPORATION IS AN INCORPORATED ENTITY DESIGNED TO LIMIT THE LIABILITY OF ITS OWNERS…

Q: Which of the following statements is true in relation to a limited liability company? A A limited…

A: We have the following question: Which of the following statements is true in relation to a limited…

Q: Are the stockholders of a corporation are considered as residual claimant of the business…

A: A shareholder, often called a stockholder, is a person, organization, or institution that owns at…

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 type of business has ownership interests that cannot be transferred to other parties without…

A: In both corporation and limited liability companies the ownership interest cannot be transferred to…

Q: 1.What are the main advantages of proprietorships, partnerships, and limited liability companies?…

A: Step 1 Advantages of the sole proprietorship Ownership in the case of a sole proprietorship is in…

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: 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: What are advantages and disadvantages of changing the company organization from sole proprietorship…

A: Advantages of LLC: Pass-through taxation No restrictions on the number of members allowed Members…

Q: For what reason do corporations retain earnings in the business?

A: Retained earnings: Retained earnings are that portion of profits which are earned by a company but…

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.

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 by step

Solved in 2 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

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.
What are some of the reasons a business owner might choose the corporate form of business?
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 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 term is used to describe the characteristic of a business entity where an individual(s) associated with an entity can not only lose all of his/her investment in the firm but personal assets can be taken to pay the debts of the firm if necessary? Group of answer choices unlimited liability limited liability dissolution mutual agency
Discuss the different types of business structures and compare and contrast these different structures (Corporate, Sole Proprietorship, Limited Liability),
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?
1) What does the phrase ‘company limited’ means in a business name? 2)Explain why a sole trader might decide to become a private limited company. How would such a change be financed?
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
Write a letter advising a hypothetical sole proprietor to choose another form of business ownership. By definition, a sole proprietorship is an unincorporated business owned by one person known as the sole proprietor. The majority of U.S. businesses are owned and operated as sole proprietorships. write a letter to a hypothetical sole proprietor explaining why he or she should convert the sole proprietorship to another form of business ownership (for example, a traditional "C" corporation, an "S" corporation, or a limited liability company).
Based on your understanding, why do agency relationship exist within businesses particularly for corporation? What is conflict of interest and how is this related to agency relationship within business firms?
What is a business owned by one individual called and the easiest legal form of business to organize that we are studying in this course? Group of answer choices limited liability company partnership sole proprietorship corporation