Which of the following is a consequence of a corporation being a separate entity from its owners?
A)The owners are not personally responsible for the obligations of a company.
B)The articles of incorporation are not required to set up a corporation.
C)A corporation cannot enter into binding contracts in its name.
D)The death or withdrawal of an owner dissolves a corporation.

Question

Which of the following is a consequence of a corporation being a separate entity from its owners?​
A)The owners are not personally responsible for the obligations of a company.
B)The articles of incorporation are not required to set up a corporation.
C)A corporation cannot enter into binding contracts in its name.
D)The death or withdrawal of an owner dissolves a corporation.

Quizplus · Accepted Answer

When a corporation is a separate entity from its owners, the owners are not personally responsible for the obligations of the company. This is known as limited liability, and it means that the personal assets of the owners are protected from the debts and liabilities of the corporation.

Therefore, option A is the correct answer, while options B, C, and D are incorrect. Option B is false because the articles of incorporation are necessary for setting up a corporation. Option C is also false, as a corporation can enter into binding contracts in its name. Option D is incorrect because the death or withdrawal of an owner does not necessarily dissolve a corporation, as it can continue to exist and operate with the remaining owners or shareholders.

Which of the Following Is a Consequence of a Corporation