If a Proprietorship Cannot Pay Its Debts,the Creditors May Make

question 151

Multiple Choice

If a proprietorship cannot pay its debts,the creditors may make claims against the:

• A) assets of the proprietorship only.
• B) assets of the proprietor.
• C) state government.
• D) employees of the business.

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Definitions:

Diversity of Citizenship

A legal principle allowing federal courts to hear cases in which the parties are citizens of different states or countries.

Federal Substantive Law

Pertains to the body of law that creates, defines, and regulates the rights and duties of parties within the United States federal legal system.

State Substantive Law

Laws that govern how matters such as contracts, property, and family issues are to be handled within a state.

Federal Procedural Law

Rules that govern the procedures for courts and judicial administration within the federal legal system.