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:

Acquisition Cost

is the total cost incurred to acquire an asset, investment, or property, which includes the purchase price and all associated expenses.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.

Cash Purchase

A transaction method in which goods or services are paid for in full with cash at the time of purchase.

Incremental Value

Incremental value refers to the additional or extra value generated by undertaking a specific action or investment compared to not doing so.