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Performance in last 10 questions - there are '3' correct answers, '1' wrong answers, '0' skipped answers, '0' partially correct answers

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Identify the forms of business organization and the uses of accounting information.

Q 1.5:

Ginni founded Waggstooth Manor Doggie Day Care and after a year in business, formed a partnership with her husband, Warren. Their friend, Phebe, is a shareholder with Networth Bank. In terms of personal liability, who is at greater risk? Why?

• A :

  Phebe, because shareholders are responsible for the company's debts, pro-rated according to the percent of stocks owned.

• B :

  Warren, because he has the least investment in the business and therefore the greater risk of liability.

• C :

  Ginni, because she founded the company as a sole proprietorship and so has unlimited personal liability, whereas Warren's liability is limited to his percent ownership in the company.

• D :

  Ginni and Warren, because both partners have unlimited personal liability, regardless of who owns a larger percentage of the company.