1. Law
2. History and Philosophy of Law
3. 19178

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On the blank line beside each question below please write the letter corresponding to the sentence or phrase that best answers the question. Note: The sentences or phrases are listed after the four questions.

(1) How does an "account receivable" arise? ____

(2) What is "equity" in terms of the interests represented under that expression on a balance sheet? ____

(3) What are three main characteristics of a corporation? ____

(4) What reasons do courts often provide when they disregard the corporate entity?____

Possible Answers:

(a) It occurs when, for instance, a particular firm buys goods or services on credit and the amount the firm owes is recorded in firm's accounts.

(b) These include limited owners, presidential voting rights and dividends on liquidation.

(c) Courts often refer to the lack of advantages of limited liability when there is only one shareholder or just a few shareholders.

(d) It occurs when, for instance, a particular firm sells goods or services to others on credit and the amount due to the particular firm is recorded in firm's accounts.

(e) It represents the interest of the persons who would be entitled to the residual remaining after the liabilities of the business have been paid off.

(f) These include perpetual existence, separate personality and limited liability.

(g) It is often said that the statutory form of organization is a mere sham, cloak, alter ego or instrumentality.

(h) It is the amount owed to the owners of the business.

(i) Courts often say they will ignore the separate corporate entity where the business has sold something to another person on credit and it is now claimed that the separate personality of the corporation and it's perpetual existence means there is limited liability and that the shareholders are entitled to the residual interest.

Thank you.