Final answer:
The correct statement about a corporation is that it is subject to greater government regulation than a proprietorship or a partnership. Shareholders are the owners, not creditors; they do not manage day-to-day operations, and changes in ownership do not lead to the termination of the corporation.
Step-by-step explanation:
A corporation is a specific form of business ownership that is more complex and structured than a sole proprietorship or a partnership. One key characteristic is that shareholders of a corporation have limited liability for the debts of the company, meaning they are not personally responsible for the company's financial obligations. Instead, their financial risk is limited to the amount of money they invested to purchase stock in the company. Addressing the question, the true statement about a corporation is: A. A corporation is subject to greater government regulation than a proprietorship or a partnership. This is because corporations must adhere to a variety of regulatory requirements, including filing articles of incorporation, issuing stock in accordance with securities laws, and adhering to specific tax rules.
Option B is incorrect, as stockholders are not creditors; they are owners. Stockholders have a claim on a portion of the corporation's assets and earnings but are not owed a debt by the company. Option C is also incorrect since the day-to-day management of a corporation is usually handled by officers and executives, rather than the stockholders themselves, who may vote on critical business decisions but do not manage daily operations. Lastly, option D is incorrect since the ownership of a corporation can change through the buying and selling of stocks without causing the corporation to terminate; it continues as an ongoing legal entity regardless of ownership changes. It is important to note that corporations can raise capital by selling stock or issuing bonds, making it possible for them to finance operations, expand, or invest in new ventures without the owners taking on additional personal financial risk.