Question

1. which of the following best describes a corporation?

a) a business that is legally considered an entity separate from its
owners and liable for its own debts.
b) a partnership where all partners share the profits and losses.
c) a sole proprietorship run by an individual.
d) an informal business agreement between two parties.

1. which statement about corporations is true?

a) corporations account for about 81% of all u.s. businesses.
b) the new york times company is the worlds largest corporation.
c) corporations are always large businesses and cannot be small
operations.
d) corporations have legal status as separate entities and can have
indefinite life spans.

1. what is a major advantage of incorporating a business?

a) corporations are not subject to any form of taxation.
b) in the event of failure, the courts can seize both the corporations
assets and the investors personal possessions.
c) investor liability is limited to personal investment in the corporation.
d) incorporation allows businesses to bypass all complex legal
requirements.

Explanation:

1. A corporation is a legal entity separate from its owners. Option A correctly states this. Option B is a partnership, Option C is a sole - proprietorship, and Option D is an informal agreement.
2. Corporations have a legal status as separate entities and can have an indefinite life span. Option A: Sole - proprietorships account for about 73% of U.S. businesses, not corporations. Option B: There is no such claim that The New York Times Company is the world's largest. Option C: Corporations can be small (e.g., S - corporations).
3. One of the major advantages of a corporation is limited liability. Option A: Corporations are taxed (e.g., corporate income tax). Option B: In a corporation, investors' personal possessions are generally protected. Option D: Incorporation has its own legal requirements.

Answer:

1. A. A business that is legally considered an entity separate from its owners and liable for its own debts.
2. D. Corporations have legal status as separate entities and can have indefinite life spans.
3. C. Investor liability is limited to personal investment in the corporation.