The gift shop chain that Althea started has since been incorporated. Which of the following best describes the liability that Althea has as the primary shareholder in this corporation?
A) Althea may have to give up her car and house if the corporation fails in order to cover the debts of the corporation.
B) The other shareholders will be able to seize Althea's personal money but not her primary residence in the event that the business fails.
C) Althea's personal assets will be protected in the event that the corporation fails, although she could lose her entire initial investment.
D) Althea will be liable only for losses that develop from decisions she made about the daily business operations.

Question

Quizplus · Accepted Answer

As the primary shareholder in a corporation, Althea's personal assets will generally be protected in the event that the corporation fails, although she could lose her entire initial investment. This is because a corporation is a separate legal entity from its owners, and it assumes its own risks and liabilities. Althea may only lose the money that she invested in the corporation and any obligations that she personally guaranteed, but she will not be personally liable for the corporation's debts and obligations.

The Gift Shop Chain That Althea Started Has Since Been