Which one of the following statements is correct?
A) The majority of firms in the U.S. are structured as corporations.
B) Corporate profits are taxable income to the shareholders when earned.
C) Corporations can have an unlimited life.
D) Shareholders are protected from all potential losses.
E) Shareholders directly elect the corporate president.

Question

Quizplus · Accepted Answer

Corporations can have an unlimited life, meaning they can continue to exist even if ownership or management changes. However, statements A, B, D, and E are incorrect. While many firms in the U.S. are structured as corporations, other forms of business structures exist. Corporate profits are subject to corporate income tax and only become taxable income to shareholders when they are distributed as dividends. Shareholders have limited liability protection, but they are not protected from all potential losses. Lastly, shareholders typically do not directly elect the corporate president - they elect the board of directors who then appoint the executive officers, including the president.

Which One of the Following Statements Is Correct