Multiple Choice
Which of the following are two disadvantages of a corporation?
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12. Stockholders' Equity
Characteristics of a Corporation
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Which of the following is an attribute of a conventional corporation?
A
Unlimited liability for owners
B
Limited liability for shareholders
C
Ownership is not transferable
D
Corporation dissolves upon death of a shareholder
Verified step by step guidance1
Step 1: Understand the concept of a conventional corporation. A conventional corporation, also known as a C corporation, is a legal entity that is separate from its owners (shareholders). It has specific attributes that distinguish it from other business structures.
Step 2: Review the concept of 'limited liability for shareholders.' In a conventional corporation, shareholders are only liable for the amount they have invested in the company. Their personal assets are protected from the corporation's debts and liabilities.
Step 3: Analyze the concept of 'ownership transferability.' In a conventional corporation, ownership is typically transferable. Shareholders can sell or transfer their shares without affecting the corporation's existence.
Step 4: Examine the concept of 'corporation dissolution upon death of a shareholder.' A conventional corporation does not dissolve upon the death of a shareholder. It continues to exist as a separate legal entity.
Step 5: Compare the options provided in the problem and identify the correct attribute of a conventional corporation. Based on the explanations above, the correct answer is 'Limited liability for shareholders.'
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