97% (32 out of 33 correct) Responses to questions are indicated by the symbol.

1. The stockholders of a corporation have unlimited liability.

A. True B. False

Correct! The liability of a stockholder is normally limited to their investment in the corporation.

2. Which of these is not a major advantage of a corporation?

A. Separate legal existence B. Continuous life C. Government regulations D. Transferable ownership rights

Correct Government regulations is a disadvantage, not an advantage of a corporation.

3. Which one of the following is a major disadvantage of a corporation?

A. Limited liability of stockholders B. Additional taxes C. Transferable ownership rights D. Limited life

Correct! While often referred to as double taxation, the corporation pays income taxes on its profits, and then when distributed, the stockholders pay income taxes on the amounts received as dividends.

4. Which of the following is not a characteristic of a corporation?

A. Separate legal existence B. Unlimited liability for stockholders C. Easy transfer of ownership interests D. Ability to acquire capital easily

Correct! Unlimited liability for stockholders is not a characteristic of a corporation. Stockholders may normally lose only up to the cost of their investment.

5. Which of the following is a disadvantage of the corporate business form?

A. No income taxes B. Government regulation C. Continuous life D. Easy acquisition of capital

Correct! Because a corporation is a separate legal entity and because of the government's desire to protect stockholders, corporations are heavily regulated.

6. Which of the following is not a stockholder's right?

A. The preemptive right B. The right to share in dividends C. The right to vote in the election for the board of