Question

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.

Answer 1

Heidi's personal assets will be protected in the event that the corporation fails, although she could lose her entire investment.

Answer: Option D.

Explanation:

In the corporation of retail card and the gift shop that was started by Heidi, she is the primary stock holder of that particular corporation. She would be the whole sole owner of the profit of the corporation that it would earn.

But in case if it fails and there are losses in the corporation, then to cover the losses, the assets which belong to Heidi will not be included to cover the losses of the corporation. Her investment in this case would be gone but not her personal assets.