Which of the Following Is True

question 144

Multiple Choice

Which of the following is true?

• A) under the partnership form of business organization, the owners are not personally liable for the debts of the business.
• B) when employees also own a business, their incentive to shirk is removed.
• C) the limited liability of stockholders under the corporate business structure makes it easier to raise equity capital.
• D) under the corporate form of business organization, the owners of the firm are personally liable for its debts.

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Definitions:

Equity Securities

Financial instruments that represent ownership in a company or an entitlement to a share in its profits.

Cost Method

An accounting approach used to measure the value of an investment, where the investment's cost includes the purchase price and any costs of acquisition.

Trading Securities

These are securities that a company holds for the purpose of selling them in the near term to profit from price variations, reported at fair value.

Comprehensive Income

The change in equity of a business enterprise during a period from transactions and other events from non-owner sources, including all revenues, gains, expenses, and losses.