Since There Is Normally Limited Liability for the Owners of Corporations

question 10

Multiple Choice

Since there is normally limited liability for the owners of corporations, special rules have evolved to protect corporate creditors. These rules are primarily concerned with

• A) borrowing by the officers of a new corporation.
• B) blocking management from impairing capital through business losses.
• C) preventing the negligent conduct of officers and/or employees.
• D) the sudden substantial impairment of the capital of a company.
• E) stopping creditors from making loans to corporate "shells".

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Definitions:

Special Journals

Accounting journals designed for the repeated recording of specific types of transactions, such as sales or purchases, to streamline the accounting process.

Cash

A form of liquid asset that represents the currency that a business or individual can immediately access and use for transactions.

Receivables

Funds that are owed to a company by its customers or clients for goods or services already delivered.

Payables

Short-term liabilities of a company, representing amounts owed to suppliers or creditors for goods and services received but not yet paid for.