When a Business Is Organized as a Corporation, Which of the Following

question 6

Multiple Choice

When a business is organized as a corporation, which of the following statements is true?

• A) Stockholders are liable for the debts of the business only in proportion to their percentage ownership of capital stock.
• B) Stockholders do not have to pay personal income taxes on dividends received, because the corporation is subject to income taxes on its earnings.
• C) Fluctuations in the market value of outstanding shares of capital stock do not affect the amount of stockholders' equity shown in the balance sheet.
• D) Each stockholder has the right to bind the corporation to contracts and to make other managerial decisions.

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Definitions:

Overgeneralization

The cognitive process in which a rule or pattern is applied too broadly, beyond its appropriate use.

Rational Emotive Behavior Therapy

Rational Emotive Behavior Therapy is a type of psychotherapy that helps individuals identify self-defeating thoughts and feelings, challenge the rationality of those feelings, and replace them with healthier, more productive beliefs.

Directive Role

A leadership or guidance style where decisions and directions are provided explicitly by the leader or authority.

Cognitive-Behavioral

Referring to a psychotherapeutic approach that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic procedure.