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Questions and Answers
What is the primary purpose of a corporation's creation?
What is the primary purpose of a corporation's creation?
- To protect the owners' personal assets
- To circumvent laws and regulations
- To create a charitable organization
- To operate for profit and distribute earnings to shareholders (correct)
What is the term for the legal separation between a corporation and its owners?
What is the term for the legal separation between a corporation and its owners?
- Corporate veil (correct)
- Separation of ownership
- Corporate liability
- Legal entity doctrine
In what circumstances may the corporate veil be pierced?
In what circumstances may the corporate veil be pierced?
- When the corporation is profitable
- When the corporation is a non-stock entity
- When the owners are not involved in the corporation's activities
- In cases of fraud or mismanagement (correct)
What doctrine addresses circumstances when the separation between owners and the corporation should be disregarded?
What doctrine addresses circumstances when the separation between owners and the corporation should be disregarded?
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What is the primary benefit of a corporation's legal entity status?
What is the primary benefit of a corporation's legal entity status?
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Study Notes
Corporation Definition
- A corporation is a legal entity created by law that has rights and liabilities separate from its owners.
- It can be created to operate for profit, distributing earnings to shareholders, or as a non-stock entity for public good.
Corporate Veil
- The corporate veil separates the corporation legally from its owners.
- The veil can be pierced to assign liability to owners in cases of fraud.
Doctrines
- Alter ego doctrine: addresses circumstances when the separation between owners and the corporation should be disregarded.
- Trust fund doctrine: addresses circumstances when the separation between owners and the corporation should be disregarded.
Key Concept
- A corporation is a legal entity with separate rights and liabilities from its owners.
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Description
This quiz covers the basics of corporations, including their legal status, rights, and liabilities. It also touches on the concept of the corporate veil and its limitations.
