A business owned by shareholders who have limited liability for the firm's debts; because it is considered a legal entity, a corporation can conduct business affairs in its name.

A business owned by shareholders who have limited liability for the firm's debts; because it is considered a legal entity, a corporation can conduct business affairs in its name.

• A. Sole Proprietorship
• B. Franchise
• C. Partnership
• D. Multinational Corporation

Answer: (D)

This item is testing the corporate form of business organization. A corporation is a separate legal entity owned by shareholders who have limited liability, meaning their personal assets are protected from the firm’s debts. Because it’s a legal entity, the corporation can own assets, enter into contracts, and conduct its affairs in its own name. Among the options, a multinational corporation best fits this description because it denotes a corporation that operates across borders, embodying the same corporate structure (limited liability, separate legal entity) on a large scale. The other forms don’t match as well: a sole proprietorship is owned by one person with unlimited liability, a partnership involves multiple owners with shared liability (often unlimited), and a franchise describes a business model rather than a form of ownership.

This item is testing the corporate form of business organization. A corporation is a separate legal entity owned by shareholders who have limited liability, meaning their personal assets are protected from the firm’s debts. Because it’s a legal entity, the corporation can own assets, enter into contracts, and conduct its affairs in its own name.

Among the options, a multinational corporation best fits this description because it denotes a corporation that operates across borders, embodying the same corporate structure (limited liability, separate legal entity) on a large scale. The other forms don’t match as well: a sole proprietorship is owned by one person with unlimited liability, a partnership involves multiple owners with shared liability (often unlimited), and a franchise describes a business model rather than a form of ownership.