Which statement about corporations is true?

Which statement about corporations is true?

• A. They are typically owned by a single individual.
• B. They have a separate legal personality from their owners.
• C. They never pay taxes.
• D. They cannot issue stock.

Answer: (B)

Corporations are separate legal personalities from their owners, meaning the business itself can own assets, enter contracts, sue, and be sued in its own name. This separation allows the company to continue beyond the lifetimes of its shareholders and gives owners limited liability for the company’s debts. That distinction is why this statement is true. The other ideas don’t fit: a corporation is not typically owned by a single person, it does pay taxes (corporate taxes and possible taxation on distributions), and it can issue stock to raise capital.

Corporations are separate legal personalities from their owners, meaning the business itself can own assets, enter contracts, sue, and be sued in its own name. This separation allows the company to continue beyond the lifetimes of its shareholders and gives owners limited liability for the company’s debts. That distinction is why this statement is true. The other ideas don’t fit: a corporation is not typically owned by a single person, it does pay taxes (corporate taxes and possible taxation on distributions), and it can issue stock to raise capital.