Which of the following is not a characteristic that distinguishes corporations from proprietorships and partnerships?
A) Corporations are separate legal entities apart from the owners.
B) Corporate earnings are subject to double taxation.
C) Corporations have mutual agency.
D) Corporations have continuous lives regardless of changes in ownership.

Question

Quizplus · Accepted Answer

Mutual agency is a characteristic of proprietorships and partnerships, not corporations. It refers to the fact that all partners can act on behalf of the business and bind it to contracts and obligations. The other three characteristics listed are distinguishing features of corporations: they are separate legal entities, can have continuous lives, and their earnings may be subject to double taxation.

Which of the Following Is Not a Characteristic That Distinguishes