Stockholders liability for losses only up to the amount they invest is called _____________

Q: Which term means that stockholders not responsible for the debts of the corporation?

Piercing the corporate veil refers to a situation in which courts put aside limited liability and hold a corporations shareholders or directors personally liable for the corporations actions or debts. Veil piercing is most common in close corporations.

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What is owned by stockholders whose liability is limited to the amount they have invested in the business?
Is the liability of corporate stockholders is limited to the amount of their investment?
Which term means that stockholders not responsible for the debts of the corporation?
In what type of ownership is an owner liable for debt but only based on how much they invested?

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Chapter 5

Question	Answer
Owned and managed by one person	Sole proprietorship
Two or more people legally agree to co-own a business	partnership
A legal entity with authority to act and have liability apart from its owners	corporation
Ease to start and end a business ability to become your own boss pride of ownership tax advantages retention of company profit	advantages of sole proprietorships
the responsibility of owners for all of the debts of the business- the risk	unlimited liability
unlimited liability limited financial resources overwhelming time commitment limited growth limited life span	disadvantages of sole proprietorships
A partnership in which all owners share in operating the business and in assuming liability for business's debts	general partnership
a partnership with one or more general partners and one or more limited partners	limited partnership
an owner who has unlimited liability and is active in managing the firm	general partner
an owner who invests money in the business but does not have any management responsibility or liability for losses beyond their investment	limited partner
the responsibility of a business's owners for losses only up to the amount they invest; limited partners and shareholders	limited liability
a partnership that looks like a corporation but is taxed like a partnership	master limited partnership MLP
a partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision	Limited liability partnership LLP
more financial resources shared management more skills and knowledge longer survival tax advantages	advantages of a partnership
unlimited liability division of profits disagreements among partners difficulty of termination	disadvantages of a partnership
a star charged legal entity with authority to act and have liability separate from its owners	Conventional (C) corporation
A unique government creation that looks like a corporation but is taxed like a sole proprietorship or partnership, must meet qualifications	S corporation
must have under 100 shareholders must be citizens or residents of the US must have one class of stock no more than 25% of income from passive sources	qualifications of S corporations
similar to S corporations but without requirements	limited liability companies (LLC)
Limited Liability ability to raise money perpetual life ease of ownership change separation of ownership from management	advantages of corporations
initial cost double taxations two tax returns size may become to large to manage difficulty terminating	disadvantages of corporations
The result of two firms joining to form one company	merger
the joining of two companies involved in different stages of related businesses	vertical merger
the joining of two firms in the same industry	horizontal merger
the joining of firms in completely unrelated industries	conglomerate merger
one company purchases the property and obligations of another company	acquisitions
an attempt by employees, management, or a group of investors to buy out the stockholders in a company by borrowing the necessary funds	leveraged buyout (LBO)
an arrangement whereby someone with a good idea for a business sells the rights to use the business's name and sell a product or service to others in a given industry	franchise agreement
One who sells their idea/product/service	franchisor
selling the name or product or service	franchise
One who buys an idea /product/service	franchisee
management and marketing assistance personal ownership nationally recognized name financial advice and assistance lower failure rates	advantages of a franchise
large start up costs shared profit management regulation coattail effects restrictions on selling fraudulent franchisors	disadvantages of franchises
a business owned and controlled by the people who use it- producers, consumers, or workers with similar needs who pool their resources for mutual gain	cooperatives

What is owned by stockholders whose liability is limited to the amount they have invested in the business?

Corporation/S-Corporation Limited liability to stockholders-liability is limited up to the amount invested personally in the business.

Is the liability of corporate stockholders is limited to the amount of their investment?

The liability of stockholders is limited to the amount each has invested in the corporation. Personal assets of stockholders are not available to creditors or lenders seeking payment of amounts owed by the corporation. Creditors are limited to corporate assets for satisfaction of their claims.

Which term means that stockholders not responsible for the debts of the corporation?

"Piercing the corporate veil" refers to a situation in which courts put aside limited liability and hold a corporation's shareholders or directors personally liable for the corporation's actions or debts. Veil piercing is most common in close corporations.

In what type of ownership is an owner liable for debt but only based on how much they invested?

A limited partnership is when two or more partners go into business together, with the limited partners only liable up to the amount of their investment. A limited liability company (LLC) is a corporate structure that protects its investors from personal responsibility for its debts or liabilities.

Stockholders liability for losses only up to the amount they invest is called ______________.

Chapter 5

What is owned by stockholders whose liability is limited to the amount they have invested in the business?

Is the liability of corporate stockholders is limited to the amount of their investment?

Which term means that stockholders not responsible for the debts of the corporation?

In what type of ownership is an owner liable for debt but only based on how much they invested?

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