17
QuizMultiple Choice

The Rise of Industrialization — Test

Question 17 • US History

The growth of business led to the development of a new type of business organization called the corporation. Which of these was a characteristic of a corporation?

Answer
A
Only the owner of the company was legally responsible if the company went bankrupt.
B
Each of the company’s stockholders was legally responsible if the company went bankrupt.
C
None of the company’s stockholders was legally responsible if the company went bankrupt.
D
The federal government was legally responsible if the company went bankrupt.

Explanation

A corporation is legally separate from its stockholders. If it went bankrupt, stockholders generally were not personally responsible for the company’s debts beyond the money they had invested. So the characteristic described is that none of the stockholders was legally responsible for the bankruptcy debts.

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