The distinguishing feature of a corporation is that:
A)a corporation is a legally defined,artificial being,separate from its owners.
B)there are no legal differences between the corporation and its owners.
C)it spreads the liability for its corporate obligations to all shareholders.
D)it provides limited liability only to small shareholders.

Question

Quizplus · Accepted Answer

A corporation is a legally defined, artificial being that is separate from its owners. This means that the corporation can own property, sue or be sued, and enter into contracts in its own name. The owners of the corporation (i.e. shareholders) are not personally liable for the debts or obligations of the corporation beyond their investment in the corporation, which provides limited liability protection. This legal separation is a key distinguishing feature of a corporation. Option B is incorrect because there are indeed legal differences between the corporation and its owners. Option C is partly incorrect, as while the liability is limited, it is limited to the shareholders' investment in the corporation, not spread to all shareholders. Option D is also incorrect as limited liability protection is offered to all shareholders, not just small ones.

The Distinguishing Feature of a Corporation Is That