Question

For a business to be considered a corporation: Multiple Choice it must issue both common and preferred stock. its stock must be sold in very large amounts. it must be organized as a separate legal entity. it must pay dividends.

Answer 1

Answer:

it must be organized as a separate legal entity.

Explanation:

A corporation is a business that is owned by shareholders. The corporation is a separate legal entity and so it can sue and be sued, pay taxes and own assets.

Advantages of a corporation include :

1. they have unlimited liabilities

2. they have unlimited life. the business doesn't end even after the death of the owners unlike a sole proprietorship

3. they have more access to capital

Disadvantages of a corporation include :

1. high cost of setting up  
2. Earnings to shareholders are taxed twice

A corporation can only issue one type of share

A corporation is under no obligation to pay dividends

Stocks of a corporation can either be sold in large or small amounts