Multiple Choice
One advantage of the corporate form of organization is the:
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1. Introduction to Accounting
Business Organization
Multiple Choice
Under the corporate form of business organization, which of the following is true?
A
Ownership is represented by shares of stock.
B
The business is typically managed directly by all owners.
C
Owners have unlimited liability for the corporation's debts.
D
The corporation dissolves automatically upon the death of a shareholder.
Verified step by step guidance1
Understand the corporate form of business organization: A corporation is a legal entity that is separate from its owners, providing limited liability protection to its shareholders.
Analyze the ownership structure: Ownership in a corporation is represented by shares of stock, which are issued to shareholders. This is a key characteristic of corporations.
Evaluate management structure: Corporations are typically managed by a board of directors and executives, not directly by all owners. Shareholders elect the board but do not manage day-to-day operations.
Consider liability: Shareholders in a corporation have limited liability, meaning they are not personally responsible for the corporation's debts beyond their investment in shares.
Examine continuity: Corporations do not dissolve automatically upon the death of a shareholder. Ownership of shares can be transferred, ensuring the corporation's continuity.
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