ACCA FA · Chapter 1 · Question 4 of 10
Which of the following is a feature of a limited liability company?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The liability of the shareholders for the company's debts is limited to any amount unpaid on their shares
Explanation
A limited liability company is a separate legal entity, so it owns its assets and is responsible for its own debts. Shareholders can lose no more than the amount they have paid, or agreed to pay, for their shares. Unlimited personal liability and taxation of profits as personal income are features of sole traders and ordinary partnerships.
More The context and purpose of financial reporting MCQs
- Q6What is the main role of the IFRS Interpretations Committee?
- Q7Which of the following statements regarding responsibility for the financial statements of a limited liability company is correct?
- Q8Within a system of corporate governance, which of the following is a key role of non-executive directors?
- Q9In an ordinary (unlimited) partnership, which of the following statements is correct?
- Q10Which financial statement reports the assets, liabilities and equity of an entity at a specific date?