Utah Contractor Practice Exam

The person(s) in charge of a corporation ___________, to pay out of their pocket, for the bills still outstanding of that corporation.

1. Is NOT held responsible

2. Is held responsible

3. Is required by law

4. Has sworn duty

The correct answer is: Is held responsible

In a corporate structure, individuals in leadership positions, such as officers or directors, generally operate under a principle known as "limited liability." This means that their personal assets are typically protected from the corporation's debts and liabilities. However, there are circumstances where those in charge may be held responsible for the corporation's unpaid bills. When the corporation cannot pay its debts, the individuals in charge are often held responsible if there are indications of misconduct, such as fraud or failing to adhere to corporate formalities. Additionally, in certain cases—like when personal guarantees are involved or for specific tax obligations—the leadership may indeed be personally liable. Thus, the correct answer indicates that individuals in charge can be held responsible for settling outstanding debts of the corporation, especially under specific legal conditions. This underscores the importance of understanding the liabilities associated with corporate management and the limits of the protection offered by corporate structure.