Which of the following is true of corporations and companies being treated as separate legal entities?
A) The owners are obligated to make all decisions on behalf of the company.
B) The rights and benefits accruing to the company belong to its owners.
C) The liability of the owners becomes limited to their investment in their company.
D) The owners are obligated to pay the company's debts from their personal estates if necessary.

Question

Quizplus · Accepted Answer

One of the main advantages of a corporation is limited liability, which means that the liability of the owners is limited to their investment in the company. This is why choice C is the correct answer. A is incorrect because the owners may appoint managers to make decisions on their behalf, and they are not obligated to make all decisions themselves. B is incorrect because the rights and benefits of the company belong to the company itself, not the owners individually. D is incorrect because the whole point of limited liability is that the owners are not personally responsible for the company's debts.

Which of the Following Is True of Corporations and Companies