Which of These Is Not a Consequence of the Status

question 13

Multiple Choice

Which of these is not a consequence of the status of a company as a separate legal entity?

• A) the right to enter into contracts in its own name
• B) the right to retain profits
• C) the obligation to pay taxation
• D) None of the above, i.e. all are consequences of the status of a company as a separate legal entity.

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Definitions:

Average Collection Period

The average amount of time it takes for a company to receive payments owed by its customers.

Net Accounts Receivable

The total amount of money owed by customers for purchases made on credit, minus any provision for doubtful accounts.

Sales Returns

Transactions where customers return previously purchased merchandise, resulting in a refund or credit.

Bad Debt Expense

An expense recorded to account for receivables that are not expected to be collected, reflecting credit losses in the financial statements.