Question

Corporations. Choose in each case the type of company that best fits the description. (LO1-3) a. The business is owned by a small group of investors. (private corporation / public corporation) b. The business does not pay income tax. (private corporation / partnership) c. The business has limited liability. (sole proprietorship / public corporation) d. The business is owned by its shareholders. (partnership / public corporation)

Answer 1

Answer: a. private corporation

b. partnership

c.public corporation

d. public corporation

Step-by-step explanation:

A. In case of public companies the number of shareholders is very high as shares are distributed on individual basis at small prices whereas in private companies the no. of owners is limited.

B. In case of partnership business is not liable to tax but the partners owning it are, whereas in case of private corporation business is a separate legal entity thus it have to pay tax.

C. In case of sole proprietorship business is not a separate legal entity whereas in case of public corporation it is. Therefore, only public corporation has limited liability.

D. Partnership is owned by its partners and public corporation by its shareholders.