Question

Which of the following statements is false?

A. Accounting is the information system that measures business activities, processes that information into reports, and communicates the results to decision makers.
B. Owners of a corporation are personally liable for the debts of the corporation.
C. Financial statements report financial information about a business entity to decision makers.
D. The purpose of financial accounting is to provide information to people outside of the entity, such as investors and creditors.

Answer 1

Answer: B

Step-by-step explanation:

As a general rule, owners, such as investors, in a public corporation are only liable for the money they have invested into the business. They can only lose what they have invested in the business. So, if the company goes bankrupt, the creditors cannot claim the owner’s personal assets.