Which of the Following Statements Is Correct

question 7

Multiple Choice

Which of the following statements is correct?

• A) Stockholders are legally liable for all the debt of a corporation.
• B) A corporation is a business that is legally owned by its employees.
• C) Corporations are legal entities that, in law, are treated as persons.
• D) Most large companies and many small companies in the United States are not corporations.

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Definitions:

Partnerships

A form of business agreement where multiple individuals jointly manage the operation and its profits.

Pooling

The act of combining resources or assets for a common purpose, often to increase efficiency or achieve a shared goal.

C Corporations

A type of corporation in the United States taxed separately from its owners, offering limited liability protection to its shareholders.

S Corporations

A type of corporation in the United States that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.