Why Is It That Only a Small Percentage of American

question 48

Multiple Choice

Why is it that only a small percentage of American firms are incorporated?

• A)Corporate debt as stockholder's liability
• B)Small size of firms
• C)Unlimited liability
• D)Inability to outlast associated individuals

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Definitions:

Contingent Liability

Contingent liability is a potential financial obligation that may arise in the future, dependent on the outcome of a specific event.

Financial Statements

Structured reports that convey the financial activities and condition of a business or individual, including balance sheets, income statements, and statements of cash flows.

Warranty Liability

An obligation companies assume when they provide a promise to repair, replace, or refund products that fail to perform as expected.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditure to the appropriate period.