Which of the Following Is Not a Factor That May

question 22

Multiple Choice

Which of the following is not a factor that may lead to "piercing the corporate veil" and imposing liability on corporate owners (shareholders) ?

• A) grossly inadequate capitalization of the corporation
• B) formation of the corporation to avoid personal liability for business obligations
• C) formation of the corporation to perpetuate a fraud or conceal illegality
• D) shareholder diversion of corporate funds or assets

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Definitions:

Income Statement

A financial statement that presents the revenues, expenses, and profits or losses of a company over a specified period, typically a quarter or year.

End-of-Year Spreadsheet

A document summarizing financial and accounting information at the conclusion of the fiscal year, aiding in analysis and decision-making.

Adjusted Trial Balance

A report that lists all the accounts and their balances after adjustments, used to ensure the total debits equal total credits before generating financial statements.

Closing Entries

Transactions noted at the end of an accounting cycle for the purpose of transferring balances from temporary accounts to their permanent counterparts.