Future Business Leaders of America (FBLA) Agribusiness Practice Test

Disable ads (and more) with a membership for a one time $4.99 payment

Enhance your FBLA Agribusiness knowledge with our comprehensive test. Dive into flashcards and multiple-choice questions, complete with hints and explanations, to ensure exam success. Prepare confidently for a bright future!

Practice this question and more.

What is one legal liability characteristic of a corporation?

Owners are fully liable for company debts
Investors share profits based on shareholding
Owners have limited liability
Corporations are exempt from taxes

The correct answer is: Owners have limited liability

In a corporation, one of the key legal liability characteristics is that owners have limited liability. This means that the personal assets of the shareholders are protected from the debts and liabilities of the corporation. In other words, if the corporation faces financial trouble or lawsuits, the maximum amount that shareholders could potentially lose is limited to their investment in the company. This feature encourages investment, as individuals can participate in the business without risking their personal wealth beyond the amount they have invested in shares. Limited liability distinguishes corporations from other business entities, such as sole proprietorships or partnerships, where owners can be personally liable for business debts, potentially putting their personal property at risk. This legal structure is fundamental to the way corporations operate and is a significant advantage that promotes business growth and entrepreneurship.