Which of the Following Statements Best Describes How Corporate Law

question 75

Multiple Choice

Which of the following statements best describes how corporate law protects creditors?

• A)Corporate law does not protect creditors.
• B)Corporate law rules restricting the payment of dividends to shareholders unless certain financial tests are satisfied protect creditors by keeping money in the corporation when the corporation requires that money to pay debt.
• C)Directors have a duty to protect the interests of creditors.
• D)Creditors can enforce restrictions on the ability of the corporation to pay dividends to shareholders.
• E)Creditors must protect themselves by contract.

Know the significance of disclosure documents in franchising and the legal requirement to provide comprehensive information to potential franchisees.

Grasp the concept of franchise earnings claims and the necessary basis for such claims.

Identify the procedures for transferring business ownership in a sole proprietorship.

Recognize the tax implications for sole proprietors and how a sole proprietorship is affected upon the owner's death.

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Definitions:

Annual Contributions

The amount of money contributed to a particular account or investment over the course of a year.

Savings Plan

A scheme that encourages regular saving with a bank or financial institution, often linked with benefits such as interest or investment returns.

Effective Rate

A comprehensive annual rate that accounts for compounding, often used in finance and investments to provide a true comparison among different financial products.

Investments

The allocation of assets with the goal of generating income or profit over time.