Jim Incorporated His Small Business So That He Would Obtain

question 41

Multiple Choice

Jim incorporated his small business so that he would obtain limited liability on company indebtedness. But when he applied for a bank loan, the bank insisted that he give a personal guarantee the loan made to the corporation. Has the incorporating of the business helped Jim as far as limiting his business liability?

• A) No, since all venders and creditors will be more leery about extending credit.
• B) No, bankers become more cautious when they see individuals incorporate just to avoid personal liability.
• C) Yes, the bank has more confidence in issuing his company the loan.
• D) Yes, it might help in other types of liability, such as product liability.
• E) No, personal guarantees are required either way.

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Definitions:

Unemployment Rate

This term measures the proportion of people without jobs who are actively seeking work in relation to the total workforce.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting and analyzing labor economics and statistical data.

Discouraged Workers

Individuals not actively searching for employment due to believing no jobs are available for them.

Labor Force

The total number of people employed or actively seeking employment in a particular country or region.