Final answer:
Expenses and losses incurred by an entity are generally borne by the shareholders or owners (B). Creditors have repayment priority, and tax authorities do not direct absorb losses induced by businesses, whose losses might eventually lead to an exit from the market.
Step-by-step explanation:
When we examine who ultimately bears the burden for losses incurred by an entity, we must consider the structure and nature of the business. In a general sense, expenses and losses incurred by the entity pass through to the B) Shareholders or Owners. Creditors have priority over owners to be repaid from the assets of the business, and even though businesses pay taxes, losses typically do not affect tax authorities directly. Instead, shareholders or owners bear the financial brunt as the value of their share or company decreases. However, a sustained pattern of losses may force a business to exit the market, which impacts not only the owners but also employees, suppliers, and the economy at large.
In the context of taxation, while businesses may use tax strategies to mitigate impact, they cannot pass on losses to the government or to tax authorities. Taxes on businesses are designed to collect revenue for governmental functions and, therefore, are not a mechanism for absorbing business losses. Instead, taxes may be a contributing factor to the financial burden on a business, as additional costs are generally either absorbed by the producer or passed on to the consumer.