Courts Have Responded by Piercing the Veil When the Shareholders

question 42

Multiple Choice

Courts have responded by piercing the veil when the shareholders have:

• A) not followed the formalities of corporate procedures.
• B) not provided an adequate financial basis for the business.
• C) used the corporation to defraud.
• D) All of these.
• E) Not followed the formalities of corporate procedures or  used the corporation to defraud.

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, providing an overview of a financial situation in a standardized format.

Current Asset

Current assets are short-term financial resources that are expected to be converted into cash, sold or consumed within one year or within the business's operating cycle, whichever is longer.

Current Liability

A company's debts or obligations that are due to be paid to creditors within one year.

Loan Requests

are formal applications made by individuals or companies to borrow money from financial institutions.