Which of the following characteristics is NOT associated with corporations?

Which of the following characteristics is NOT associated with corporations?

• A. Ownership by individuals through shares
• B. Unlimited liability for shareholders
• C. Separation of ownership and management
• D. Limited liability for shareholders

Answer: (B)

The characteristic of unlimited liability for shareholders is not associated with corporations. In fact, one of the primary advantages of incorporating a business is that it provides a layer of protection for shareholders by limiting their liability. This means that the personal assets of shareholders are typically protected; they are only liable for the corporation's debts up to the amount they invested in shares. If a corporation faces legal action or goes bankrupt, shareholders cannot lose more than their investment in the company's stock. Ownership by individuals through shares is a fundamental aspect of corporations, as they allow for the buying and selling of ownership. The separation of ownership and management is also a defining characteristic, as shareholders (owners) elect a board of directors to oversee the management of the corporation. Limited liability for shareholders is inherently a feature of the corporate structure, designed to encourage investment while protecting individual investors.

The characteristic of unlimited liability for shareholders is not associated with corporations. In fact, one of the primary advantages of incorporating a business is that it provides a layer of protection for shareholders by limiting their liability. This means that the personal assets of shareholders are typically protected; they are only liable for the corporation's debts up to the amount they invested in shares. If a corporation faces legal action or goes bankrupt, shareholders cannot lose more than their investment in the company's stock.

Ownership by individuals through shares is a fundamental aspect of corporations, as they allow for the buying and selling of ownership. The separation of ownership and management is also a defining characteristic, as shareholders (owners) elect a board of directors to oversee the management of the corporation. Limited liability for shareholders is inherently a feature of the corporate structure, designed to encourage investment while protecting individual investors.