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Corporations Quiz

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Questions and Answers

Which statement accurately describes a corporation?

c. A corporation is a distinct legal entity with its own authority and liability. (correct)

b. A corporation is solely responsible for its owners' actions.

a. A corporation can't engage in legal actions without its owners' consent.

d. A corporation's owners are personally liable for all its obligations.

What is the main characteristic of a corporation?

d. It is a distinct legal entity with its own authority and liability. (correct)

a. It requires the consent of its owners for legal actions.

c. It has no authority or liability.

b. It is solely responsible for its owners' actions.

What is the liability of a corporation's owners?

d. They have no liability in relation to the corporation.

b. They are solely responsible for all obligations of the corporation.

a. They are not liable for any obligations of the corporation. (correct)

c. They are personally liable for all obligations of the corporation.

Study Notes

Corporation Characteristics

A corporation is a legal entity that is separate from its owners, known as shareholders.
The main characteristic of a corporation is limited liability, which means that the owners' personal assets are protected from the corporation's debts and obligations.

Liability of Corporation's Owners

The liability of a corporation's owners is limited to the amount of their investment in the corporation.
This means that shareholders are not personally responsible for the corporation's debts and obligations, and their personal assets are not at risk.

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Description

Test your knowledge on corporations with this quiz! Learn about the legal characteristics and responsibilities of corporations and find out which statement accurately describes them.