Question

Identify which of the following statements are true for the corporate form of organization. (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

O Shareholders are not personally liable for corporate acts.
O Directors oversee its business affairs.
O The sale of shares from one stockholder to another does not impact operations. An exception is when it changes the makeup of directors.
O Stockholders do not have the power to bind the corporation to contracts.
O Owners are personally liable for corporate debts.
O Corporations are often subject to fewer regulations than partnerships.
O The president and vice presidents choose the board of directors.

Answer 1

In corporate organizations, shareholders have limited liability, directors oversee business affairs, and the sale of shares doesn't directly impact operations. Shareholders don't bind the corporation to contracts and aren't personally liable for debts, contrary to the implication that corporations face fewer regulations or presidents choose directors.

Step-by-step explanation:

To address the provided statements regarding the corporate form of organization, we can assess the attributes that characterize corporations:

• Shareholders are not personally liable for corporate acts: This is true. In corporations, shareholder liability for the company's debts and legal violations is limited to the extent of their investment in the corporation. They risk the capital they have invested, but their personal assets are usually protected.
• Directors oversee its business affairs: This is true. Directors serve on the board of a corporation and are responsible for making major business decisions and overseeing the management of the company.
• The sale of shares from one stockholder to another does not impact operations: This is typically true. The day-to-day operations of a corporation are not affected by changes in stock ownership. However, if the sale of shares results in a change in who controls the majority share and thus the composition of the board of directors, it could affect the strategic direction of the business.
• Stockholders do not have the power to bind the corporation to contracts: This is generally true since the management, specifically, officers like the CEO or President, have the authority to enter into contracts on behalf of the corporation.
• Owners are personally liable for corporate debts: This is false. For corporations, the personal assets of shareholders are not typically at risk for the company's debts.
• Corporations are often subject to fewer regulations than partnerships: This statement is generally false as corporations often face more stringent regulations than partnerships or sole proprietorships.
• The president and vice presidents choose the board of directors: This is generally false. The shareholders usually elect the board of directors, who then often appoint the president and other officers.

In summary, a corporation's structure provides limited liability to its shareholders, allows for separation between management and ownership, and facilitates ease of transferring ownership. The directors and officers manage the affairs of the corporation, while the shareholders provide capital and have limited control over specific corporate decisions through their voting rights.