1. Limited liability companies are primarily designed to:

Group of answer choices

provide limited liability to the shareholders in that if a firm goes bankrupt, the lenders to the firm cannot claim the personal assets of all individual shareholders.

only allow a small proportion of their owners, say 20%, to enjoy limited liability while the rest do not have limited liability.

provide the benefits of the corporate structure only to foreign-based entities.

allow the government to tax the limited liability company.

allow companies to reorganize themselves through the bankruptcy process.

2. Sundeep Co Ltd. paid $480,000 in dividends and $600,000 in interest to lenders in 2022. In 2022, Sundeep recorded revenues of $3m and applicable expenses on wages, raw materials and utilities of $500,000. Depreciation is $200,000. The earnings before interest and taxes is $2.3m. Tax rate is 20%. Calculate the retained earnings that is to be added to total shareholder equity at the end of 2022.

Group of answer choices

$880,000

$928,000

$750,000

$577,000

$464,000

3. XYZ Company had net income of $40 million in 2001. The firm paid no dividends. If there were no further changes to the stockholders equity accounts, then __________________ by $40 million.

Group of answer choices

retained earnings must have increased

common stock must have increased

total shareholders equity must have decreased

paid-in surplus must have decreased

the market value of the firms stock must have decreased