Which of the Following Statements Is NOT True of a Corporation

question 46

Multiple Choice

Which of the following statements is NOT true of a corporation?

• A) It can incur debt that is an obligation of the corporation but not of its individual owners.
• B) It has the right to sue and be sued.
• C) It is an entity separate from the individuals who own it.
• D) It is legally obliged to distribute all profits to shareholders.
• E) It can enter into contracts.

---

Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Dividend Per Share

A measure of the total dividends declared in a period divided by the number of outstanding ordinary shares.

Excess Cash

The amount of cash owned by a business that exceeds its immediate operational and investment needs, often signaling financial strength.

Equity Financed

Refers to the method of funding a company or its operations through selling shares of stock to investors, rather than acquiring debt.