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A company collapses owing money, yet its shareholders lose only what they invested. That protection is called:
ALimited longevity
BLimited liability
CLimited licensing
DLimited liquidity
Answer & Solution
Correct answer: B. Limited liability
1. The company is legally separate from the people who own it.
2. Creditors can reach the company's assets, not the owners' own.
3. That protection is limited liability.
_Source: OpenStax Principles of Financial Accounting, Chapter 2, Introduction to Financial Statements._
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