The Maximum Amount of Money That Company Shareholders Can Lose

question 9

Multiple Choice

The maximum amount of money that company shareholders can lose on their investment in the corporation is

• A) whatever percentage of their wealth equals their percentage of ownership.
• B) whatever they paid for the shares in the company.
• C) whatever the corporation loses each year times the percentage of ownership in the company.
• D) zero.

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Definitions:

Cost Principle

An accounting principle that states all goods and services purchased by a business must be recorded at their historical cost, not their current value.

Monetary Unit

A standard unit of value in which economic transactions are recorded and the primary currency used within an economy.

Legal Taxable Entity

An organization or individual that is recognized by law as a separate legal entity for tax purposes.

Shares Of Stock

Representations of ownership in a corporation, each of which entitles the shareholder to a fraction of the company's assets and profits, depending on the amount of shares owned.