Owners of a company:
A)hold promissory notes as evidence of their ownership claim.
B)are entitled to repayment of their investment.
C)have a claim that is secondary to creditor's claims.
D)have a claim equal to the amount of liabilities a company owes.

Question

Quizplus · Accepted Answer

Owners have a claim on company assets that is secondary to creditor's claims.Promissory notes are the legal documents that describe the details of a loan;stock certificates are evidence of ownership claims.A business is obligated to repay debt financing,but is not obligated to repay equity financing.Creditors have a claim on company assets equal to the amount of liabilities that the company owes.

Owners of a Company