Which of the following statements is TRUE of a corporation?
A) Shareholders can be required to pay debts of the corporation.
B) Shares of stock cannot be readily purchased and sold by investors on an organized stock exchange.
C) Shareholders are authorized to sign contracts or make business commitments on behalf of the corporation.
D) Corporations pay income tax on corporate earnings, and shareholders pay income tax on the dividends received.

Question

Quizplus · Accepted Answer

Corporations pay income tax on their earnings, and shareholders pay income tax on dividends received. This is known as double taxation. It is not true that shareholders can be required to pay debts of the corporation or that they can sign contracts on behalf of the corporation. Additionally, shares of stock can be readily bought and sold by investors on organized stock exchanges.

Which of the Following Statements Is TRUE of a Corporation