Question

Which of the following is true of a​ corporation?

A. A corporation has a limited life.
B. The stockholders of a corporation have unlimited liability for the​ corporation's debt.
C. A corporation cannot be privately held.
D. The earnings of a corporation may be subject to double taxation.

Answer 1

Answer: Option D

Step-by-step explanation: In simple words, corporation refers to the entity that has its own separate legal identity from its owner. The owners of an entity are called the shareholders and they cannot be privately held for the liabilities except in cases of fraud or other such activities.

These entities have perpetual existence and could not be killed or destroyed but in case of any severe losses or lack of funds it can be liquidated at the discretion of shareholders.

The earnings of a corporation are first taxed at a corporate level and after that it is distributed at the shareholders level who receive this taxed income in form of dividends.