Multiple Choice
Which of the following is considered a disadvantage of the corporate form of business organization?
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12. Stockholders' Equity
Characteristics of a Corporation
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Which type of business organization has the ability to sell stock to raise capital?
A
Sole proprietorship
B
Partnership
C
Limited liability company (LLC)
D
Corporation
Verified step by step guidance1
Understand the characteristics of each type of business organization: Sole proprietorship, Partnership, Limited Liability Company (LLC), and Corporation.
Recognize that Sole proprietorships and Partnerships are typically owned by individuals or groups and do not have the ability to issue stock.
Learn that Limited Liability Companies (LLCs) provide limited liability protection to owners but are not structured to issue stock for raising capital.
Identify that Corporations are unique among these business types because they are legal entities separate from their owners and have the ability to issue stock to raise capital.
Conclude that the correct answer is Corporation, as it is the only type of business organization listed that can sell stock to raise capital.
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