Question

23. What are the characteristics of corporations (1 mark).

Answer 1

A corporation is a legal entity which has limited liability that is separate and distinct from its owners.These are the main charecteristics of corporation:

1. Limited liability : the stock holders have a liability up to maximum of its paid up value held.

2. Ownership: the ownership and management are two separate things in a corporation i.e., ownership rests with the stockholders and the management lies board of directors appointed for the purpose.

3.Capital acquisition becomes easier for a corporation as it is more professional managed and accountable than individuals and other forms.

4.Separate legal entity : It means that the corporation is different from its owners and operating on its own,and has its own rights and responsibilities like any person.

5.Also corporation have their own life span ., few forever few for a limited time to achieve its purpose.