Which of the following is true of a corporation 1 It has unl

Which of the following is true of a corporation?

1. It has unlimited liability.

2. It cannot exist apart from its owners.

3. It cannot be taxed and sued like an individual.

4. It has a tougher time getting credit than any other type of business.

5. It pays more taxes than any other type of business.

Solution

A corporation is a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets and pay taxes. The most important aspect of a corporation is limited liability. This means that shareholders have the right to participate in the profits, through dividends and/or the appreciation of stock, but are not held personally liable for the company\'s debts. Corporations can raise funds more easily than other types of businesses by selling or pledging its shares

It therefore can be concluded that following statements about Corporations are FALSE :

It has unlimited liability

It cannot exist apart from its owners

It cannot be taxed or sued like an individual

It has a tougher time getting credit than any other type of business

Following therefore is TRUE about Corporation :

“It pays more taxes than any other type of business “

ANSWER :   It pays more taxes than any other type of business