Question

7 ss.912.a.3.4 (moderate) this chart shows three different kinds of business organizations that emerged during the second industrial revolution. what competitive advantages does a corporation have over a partnership and a sole proprietorship? types of business organizations sole proprietorship partnership corporation who owns the business? one owner who often manages the business two or more owners who usually manage the business shareholders: managers are hired. how is money raised? uses savings of owner; borrows from creditors invests savings from limited partners; borrows from creditors sells stock; borrows from creditors a a corporation is easy to establish and there are very few costs to set up. b a corporation exists as a separate entity so owners have limited liability. c each partner in a corporation benefits equally from the profits. d a shareholder can borrow money to help fund the corporation.

Explanation:

• Option A: Sole proprietorships are easier to establish with fewer setup costs compared to corporations. Corporations involve legal formalities like filing articles of incorporation.
• Option B: A key advantage of a corporation is that it is a separate legal entity. This means shareholders (owners) have limited liability. Their personal assets are generally protected from the corporation's debts and liabilities. In a sole - proprietorship, the owner's personal assets are at risk, and in a general partnership, partners can also be held personally liable.
• Option C: In a corporation, profits are distributed based on the number of shares held. It is not an equal distribution among all “partners” (shareholders have different amounts of shares). In a partnership, profit - sharing can be more evenly divided among partners (depending on the partnership agreement), but this is not an advantage of a corporation.
• Option D: While a corporation can borrow money (by selling bonds, for example), a shareholder borrowing money is a personal loan and not a competitive advantage of the corporation. A sole proprietor or partner can also borrow money on a personal basis.

Answer:

B. A corporation exists as a separate entity so owners have limited liability.