Limited Liability Exists When

question 439

Multiple Choice

Limited liability exists when

• A) the liability of owners is limited to the value of the shares in the firm they own.
• B) the liability of owners is limited to the share of the debt they personally took on.
• C) partners specialize and each partner is responsible for the debts of his or her specialized area.
• D) bondholders must receive their payments before stockholders can earn any money.

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Definitions:

Knowledge Exploitation

The process of utilizing existing knowledge within an organization to create value or competitive advantage.

Perception

The process of interpreting the messages of our senses to provide order and meaning to the environment.

Threat

A threat is any circumstance or event with the potential to cause harm to a system, individual, organization, or country.

Inertia

The resistance to change or the tendency for objects or systems to remain in their current state without external force acting upon them.