ACCA Applied Knowledge · Business and Technology · The purpose and types of business organisation
Which of the following is a defining legal feature of a company incorporated as a separate legal entity?
A company incorporated as a separate legal entity can own property and enter into contracts in its own name. It is distinct from its members, who have limited liability, and it continues to exist despite changes in membership or the death of shareholders.
- AThe company can own property and enter into contracts in its own nameCorrect
- BThe members are personally liable for all the company's debts without limit
- CThe company ceases to exist when a shareholder dies
Explanation
A company has separate legal personality, so it can hold assets and contract in its own name. Members of a limited company are not liable for its debts beyond any unpaid share capital. The company has perpetual succession, so a shareholder's death does not end it.
Did you get it right without looking?
One question tells you little. A timed set on The purpose and types of business organisation shows your real accuracy, how long you take and where you lose marks.
More The purpose and types of business organisation questions
- Zeta Ltd's directors choose to accept a satisfactory level of profit rather than pursue the maximum possible, because they wish to avoid the…
- Which of the following is most likely to be a primary objective of a government-owned public sector hospital?
- A manufacturer plans to close a local plant to raise returns for shareholders. Employees and the local community oppose the closure. Which t…
- A city council is considering outsourcing its refuse collection to a private company under a contract. The council remains responsible for e…
- A listed company's directors decide to accept a lower return on a project in order to protect the local environment and keep good relations …
- Which of the following is the most significant way in which the objectives of a typical private sector company differ from those of a public…