Joe and Josephine Have Started a Plumbing Business and Have

question 15

True/False

Joe and Josephine have started a plumbing business and have incorporated. They invest nothing into the corporation, and the corporation has minimal assets. One day Josephine negligently damages a main pipe in a customer's home, causing the basement to flood and resulting in $20,000 in damages. The homeowner's only remedy is to sue the corporation, but the corporation has no funding and only minimal assets. Thus the homeowner must bear the loss because Joe and Josephine are shielded from liability due to the corporate protections the business entity affords them.

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Definitions:

Residual Income

The amount of income that remains after all personal debts and expenses have been paid.

Minimum Acceptable

The lowest level or standard that is satisfactory or allowable.

Income From Operations

Represents the profit from a company's core business operations, excluding deductions of interest and taxes.

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the profitability of a company.