One advantage of the corporate form of organization is the:

• A. ease of formation compared to a sole proprietorship
• B. limited liability of shareholders
• C. unlimited life of the owners
• D. lack of government regulation

Answer: (B)

Verified step by step guidance

1. Understand the corporate form of organization: A corporation is a legal entity that is separate from its owners (shareholders). This separation provides certain advantages compared to other forms of business organization, such as sole proprietorships or partnerships.
2. Analyze the concept of limited liability: In a corporation, shareholders are only liable for the amount they have invested in the company. They are not personally responsible for the corporation's debts or legal obligations, which is a key advantage of this form of organization.
3. Consider the concept of unlimited life: Unlike sole proprietorships or partnerships, a corporation has an unlimited life. It continues to exist even if the ownership changes or if shareholders pass away.
4. Evaluate ease of formation: Corporations typically require more formalities and regulatory compliance during formation compared to sole proprietorships, which are simpler to establish.
5. Review government regulation: Corporations are subject to more government regulations and reporting requirements compared to sole proprietorships or partnerships, which may be seen as a disadvantage rather than an advantage.