Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which type of corporation is created primarily to make a profit?

1. Nonprofit corporation

2. For-profit corporation

3. Publicly held corporation

4. Limited partnership

The correct answer is: For-profit corporation

A for-profit corporation is established with the primary goal of generating profit for its shareholders. This type of corporation operates in a way that aims to maximize earnings through various business activities, including selling products or services, managing investments, and seeking to grow its market share. The profits made by this corporation can be distributed to shareholders in the form of dividends or reinvested in the company to fuel further growth. In contrast, a nonprofit corporation is designed to serve public or community needs, focusing on social, educational, or charitable objectives rather than profit generation. A publicly held corporation is a subset of for-profit corporations but specifically refers to those whose shares are traded on public stock exchanges, which means they have a broader base of shareholders. Limited partnerships consist of general partners who manage the business and limited partners who invest but have restricted liability; they can include profit-oriented motives but are not classified solely as a type of corporation. Thus, the essence of a for-profit corporation lies in its foundational purpose to generate profits, making it the appropriate choice in this context.