Question

Corporate stockholders are not responsible for the debts of the corporation. This is MOST LIKELY an example of

A) dividends.
B) partnerships.
C) limited liability.
D) unlimited liability.

Answer 1

A. didvidends....is your answer

Answer 2

Answer: limited liability.

Explanation: In the case of limited liability, considering corporations as a separate entity the stockholders cannot be held liable for the debts of the corporation. Here a stockholder’s financial liability is restricted to a certain amount, generally the value of a stockholder’s investment in that partnership or company. If a legal suit is filed against a company with limited liability, then the claimants are only suing the company, not its investors or owners. Hence, in a limited company, a shareholder is only liable for any unpaid amount on the shares in the company and the amount invested in the company, whereas not for any of the debts of the company.