Final answer:
It is false that a business firm whose shares are held by a single person cannot be a corporation; a single individual can hold all the shares of a private corporation, which is still a separate legal entity.
Step-by-step explanation:
The statement that a business firm whose shares are held by a single person cannot be a corporation is false. A business can be organized as a sole proprietorship, partnership, or a corporation. While sole proprietorships are owned and operated by one individual, a corporation could be privately held and have a single shareholder. In this case, the corporation is still a separate legal entity distinct from its owner, who holds all shares.
Unlike sole proprietorships, where the owner is responsible for all debts and liabilities, a corporation offers limited liability protection. New businesses often start as sole proprietorships due to the simplicity of management and tax advantages, but they may choose to incorporate for various reasons such as liability protection, raising capital, or continuity purposes.