Which of the following describes a special-purpose entity?
A)Entities with limited lives that a company creates to achieve a specific objective.
B)An association of two or more entities for the purpose of achieving a specific goal.
C)Corporations that U.S.tax laws treat as partnerships,and they do not pay income taxes.
D)A special type of partnership that confines the limited partner's potential loss to the amount of his or her investment.

Question

Quizplus · Accepted Answer

A special-purpose entity is a separate legal entity created by a company for a specific purpose, such as a project or investment, and has a limited life. It is often used to isolate financial risks and liabilities associated with the purpose for which it was created.

Which of the Following Describes a Special-Purpose Entity