Limited Liability Means

question 31

Multiple Choice

Limited liability means

• A)that in the event of liquidation,owners need to contribute only enough additional money so as to fully pay off the creditors of a corporation.
• B)the creditors of a corporation can receive only up to and no more than the amount due to them.
• C)that the company is required to pay only current liabilities in the current year and has no obligation to pay long-term liabilities in the current year.
• D)that corporations can have liabilities only up to a certain amount,due to limits on the company's borrowing capability.
• E)the creditors of the corporation have claims on only the assets of the corporation and not the assets of the owners of the corporation.

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Definitions:

Interest Allowance

An amount that reduces the gross interest income earned, related to the cost of borrowing or credit facilities.

Income Summary

An account used in the closing process during accounting that accumulates revenues and expenses to determine net income or loss.

Net Loss

The amount by which total expenses exceed total revenues for a business during a specific period, indicating a reduction in equity.

Salary Allowances

Compensation or benefits on top of regular salary, often for specific purposes like housing, travel, or meals.