Three ladies decide to go into business publishing cookbooks. They form a corporation, having been told that the corporate form of ownership carries limited liability. They decide not to purchase any form of liability insurance for the corporation because their loss in the event of an uninsured liability loss will be limited to the amount of their initial investment. Is there a fallacy in their logic?
Three ladies decide to go into business publishing cookbooks. They form a corporation, having been told that the corporate form of ownership carries limited liability. They decide not to purchase any form of liability insurance for the corporation because their loss in the event of an uninsured liability loss will be limited to the amount of their initial investment. Is there a fallacy in their logic?
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 11DQ
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Three ladies decide to go into business publishing cookbooks. They form a corporation, having been told that the corporate form of ownership carries limited liability. They decide not to purchase any form of liability insurance for the corporation because their loss in the event of an uninsured liability loss will be limited to the amount of their initial investment. Is there a fallacy in their logic?
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