Which of the following is NOT listed as a disadvantage of a corporation?

Which of the following is NOT listed as a disadvantage of a corporation?

• A. Limited liability
• B. Expensive
• C. Complicated, may not be able to obtain credit
• D. Difficult to dissolve

Answer: (A)

Limited liability is an advantage of a corporation because it protects owners’ personal assets from the company’s debts and obligations. This means a shareholder’s risk is limited to the amount they invested, which is not a drawback of the structure. The other points describe common downsides: higher costs to set up and maintain the entity, more complex legal and regulatory requirements, and potential difficulties in obtaining credit due to the separation of ownership and management and the need for extensive financial reporting. Since limited liability is a benefit rather than a disadvantage, it is the correct choice for “NOT listed as a drawback.”

Limited liability is an advantage of a corporation because it protects owners’ personal assets from the company’s debts and obligations. This means a shareholder’s risk is limited to the amount they invested, which is not a drawback of the structure. The other points describe common downsides: higher costs to set up and maintain the entity, more complex legal and regulatory requirements, and potential difficulties in obtaining credit due to the separation of ownership and management and the need for extensive financial reporting. Since limited liability is a benefit rather than a disadvantage, it is the correct choice for “NOT listed as a drawback.”