Which of the Following Statements Is Correct

question 46

Multiple Choice

Which of the following statements is correct?

• A) A shareholder's liability to contribute to the debts of an insolvent company is limited.
• B) The owner of a sole proprietorship is not legally liable for its debts.
• C) Special legal requirements must be met when forming a partnership.
• D) A partnership is a separate legal entity.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary depending on income level, type of tax, or jurisdiction.

Deferred Tax

A tax obligation that a company owes in the future due to timing differences between its taxable income and its accounting earnings.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded, representing liabilities for services or goods received.

Tax Deductible

Expenses that can be subtracted from gross income to reduce the amount of income subject to tax, thereby lowering the tax liability.