Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Characteristics of a Corporation

Financial Accounting

12. Stockholders' Equity

Characteristics of a Corporation

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Multiple Choice

A shareholder's liability in a corporation is limited to which of the following?

The corporation's total outstanding debts

The corporation's total assets

All personal assets of the shareholder

The amount invested in the corporation's stock

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Verified step by step guidance

Understand the concept of limited liability: In a corporation, shareholders are not personally liable for the debts or obligations of the corporation beyond their investment in the company. This is a key feature of corporate structure.

Review the options provided: Analyze each option to determine its relevance to the concept of limited liability. For example, 'The corporation's total outstanding debts' and 'The corporation's total assets' are obligations or resources of the corporation, not the shareholder.

Eliminate incorrect options: 'All personal assets of the shareholder' is incorrect because limited liability ensures that shareholders' personal assets are protected from corporate debts.

Focus on the correct option: 'The amount invested in the corporation's stock' is the correct answer because shareholders' liability is limited to the amount they have invested in purchasing shares of the corporation.

Conclude with the principle: Reinforce the understanding that limited liability is a legal protection for shareholders, ensuring their risk is confined to their investment in the corporation and does not extend to personal assets.