The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder.
Answer
True
False
To determine whether the statement is true or false, we need to understand the concept of limited liability in a corporation.
In a corporation, ownership is divided into shares of stock, and individuals who buy these stocks are referred to as stockholders or shareholders. One advantage of investing in a corporation is the principle of limited liability, which means that the financial loss for each stockholder is usually limited to the amount they have invested in the corporation.
This means that if the corporation incurs debts or faces financial difficulties, the stockholders are not personally liable to repay these debts beyond the amount they have invested. Their personal assets and finances are generally protected, and they are not held responsible for the corporation's obligations.
Now that we understand the concept of limited liability in a corporation, we can answer the question:
The statement "The financial loss that each stockholder in a corporation can incur is usually limited to the amount invested by the stockholder" is true. This means that stockholders are generally protected from incurring additional financial loss beyond their initial investment in the corporation.