The retail card and gift shop chain that Heidi started has since been incorporated. Which of the following best describes the limited liability that Heidi has as the primary stockholder in this corporation?
A) Heidi has no responsibility if the business fails and will still be able to get her initial investment back.
B) Heidi may have to give up her car and house if the corporation fails in order to cover the debts of the corporation.
C) The other stockholders will be able to seize Heidi's personal money but not her primary residence in the event that the business fails.
D) Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment.
E) Heidi will only be liable for losses that develop from decisions she made about the daily business operations.

Question

Quizplus · Accepted Answer

As a primary stockholder in a corporation, Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment. This is because a corporation has limited liability, which means that its shareholders are not personally responsible for the corporation's debts or financial obligations beyond their investment in the company. However, if Heidi has personally guaranteed any loans or debts for the corporation, she may still be held liable for those.

The Retail Card and Gift Shop Chain That Heidi Started