A business created as a distinct legal entity composed of one or more individuals or entities is called a(n):
A)corporation.
B)sole proprietorship.
C)general partnership.
D)limited partnership.
E)unlimited liability company.

Question

Quizplus · Accepted Answer

A corporation is a separate legal entity composed of one or more individuals or entities. It has the ability to enter into contracts, sue and be sued, borrow money, own assets, and pay taxes in its own name. Shareholders own the corporation but are not personally liable for its debts or legal obligations.

Note: Choice (B) is incorrect as a sole proprietorship is not a distinct legal entity, but rather a business owned by a single individual. Choice (C) is incorrect as a general partnership is also not a distinct legal entity, but rather a business owned by two or more individuals who share profits and liability. Choice (D) is incorrect as a limited partnership is a type of partnership with both general and limited partners, where the latter are only liable up to the amount of their investment. Choice (E) is incorrect as an unlimited liability company is not a recognized business structure.

A Business Created as a Distinct Legal Entity Composed of One