Question

The growth of business led to the development of a new type of business organization called the corporation. What was characteristic of a corporation?

a) Limited liability for shareholders
b) Sole proprietorship structure
c) Lack of centralized management
d) Unlimited liability for shareholders

Answer 1

The defining characteristic of a corporation is the limited liability provided to shareholders, which protects the personal assets of the owners from business debts and legal actions.

Step-by-step explanation:

The characteristic of a corporation is a) Limited liability for shareholders. Unlike sole proprietorships or partnerships where owners can be held personally liable for business debts and legal actions, corporations provide a layer of protection to the personal assets of the shareholders. The creation of corporations allowed businesses to take risks without their owners fearing the loss of personal assets beyond the initial investment in the company. This separation of personal liability from business risks was pivotal in securing investments and accelerating the growth of industries.