Which of the Following Is an Incorrect Statement

question 65

Multiple Choice

Which of the following is an incorrect statement?

• A) A corporation may file suit in its own name without the principals filing suit.
• B) A corporation may form a contract in its own name without the principals guaranteeing the contract.
• C) A corporation can be sued without the principals being sued.
• D) A corporation may not incur obligations separate from those of its principals.

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Definitions:

Net Basis

A method of reporting gains and losses by setting off related items directly against each other, resulting in a net figure.

Financial Liabilities

Obligations owed to another entity, typically involving the future transfer of cash, goods, or services.

Amortised Cost

The amount at which financial assets or liabilities are measured in the balance sheet after the deduction of principal payments and plus or minus the cumulative amortization of any difference between the initial amount recognized and the maturity amount.

Effective Interest Rate

The true cost of borrowing that includes all fees and compounding of interest, expressed as an annual rate.