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What is a key advantage of a corporation?

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Question: What is a key advantage of a corporation?

Options:

  1. Simplicity in management
  2. Limited liability for owners
  3. Direct control by owners
  4. No taxation on profits

Correct Answer: Limited liability for owners

Solution: 

A corporation provides limited liability protection to its owners, meaning they are not personally responsible for the company\'s debts.

What is a key advantage of a corporation?

Practice Questions

Q1
What is a key advantage of a corporation?
  1. Simplicity in management
  2. Limited liability for owners
  3. Direct control by owners
  4. No taxation on profits

Questions & Step-by-Step Solutions

What is a key advantage of a corporation?
  • Step 1: Understand what a corporation is. A corporation is a type of business that is legally separate from its owners.
  • Step 2: Learn about limited liability. Limited liability means that the owners (shareholders) are not personally responsible for the corporation's debts.
  • Step 3: Realize the benefit. If the corporation owes money or faces lawsuits, the owners' personal assets (like their house or savings) are protected.
  • Step 4: Conclude that this protection encourages people to invest in corporations, knowing their personal finances are safe.
  • Limited Liability – Limited liability means that the owners (shareholders) of a corporation are not personally liable for the debts and obligations of the corporation.
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