Which of the following is true regarding the extent of shareholder’s liability t

Question

Which of the following is true regarding the extent of shareholder’s liability to corporate creditors? a.A shareholder is Liable to the corporation’s creditors to the extent of the value of the shareholder’s corporate shares b.A shareholder is Liable to the corporation’s creditors to the extent the corporation is unprofitable during a reporting period. c.A shareholder is personally liable to the corporation’s creditors regardless of the value of the shareholder’s corporate shares. d.A shareholder is Liable to the corporation’s creditors to the extent that the shareholder’s equity exceeds corporate assets.

Explanation / Answer

Answer: A shareholder is liable to the corporation's creditors to the extent of the value of the shareholder's corporate shares because the shareholder's liability is limited. The shareholder's are liable to the corporation creditors only to the extent of amount on share's uncalled by the corporation.

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