PRC-3 · Chapter 2 · Question 14 of 61
In a corporate structure, the entity is considered a separate 'legal person' distinct from its owners. What is a direct consequence of this separate legal identity?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The company can sue and be sued in a court of law
Explanation
Because a company is a separate legal entity, it has its own legal rights and obligations, including the ability to enter contracts, sue, and be sued.
More Ownership of Business MCQs
- Q16Farmers in a rural area pool their resources together to buy expensive harvesting equipment that they all share. They operate the business…
- Q17Which of the following entities represents a public sector organization established by the government to provide essential services to…
- Q18What is the primary role of the Board of Directors in a public limited company?
- Q19Which of the following is true regarding the dissolution of a sole proprietorship compared to a limited company?
- Q20In a partnership, one specific partner provides capital but does not participate in the active management of the firm, and their liability…