When a corporation is formed, it is granted which of the following rights?

• A. The right to avoid all forms of taxation
• B. The right to issue currency
• C. The right to vote in federal elections
• D. The right to enter into contracts in its own name

Answer: (D)

Verified step by step guidance

1. Understand the concept of a corporation: A corporation is a legal entity that is separate from its owners and is granted certain rights and responsibilities under the law.
2. Review the rights typically granted to a corporation: These include the ability to enter into contracts, own property, sue and be sued, and comply with taxation laws.
3. Clarify misconceptions about corporations: Corporations do not have the right to avoid taxation, issue currency (this is reserved for governments), or vote in federal elections (this is reserved for individuals).
4. Focus on the correct answer: A corporation is granted the right to enter into contracts in its own name, which is a fundamental aspect of its legal status as a separate entity.
5. Relate this to financial accounting: Understanding the rights of a corporation is important for recording transactions and preparing financial statements, as contracts often form the basis for financial obligations and revenues.