QAEconomics › Why were corporations formed?

Why were corporations formed?

A. To protect individual investments

B. To make greater money for tribes

C. To protect constructed railroads

D. To make the government money


Answer: A. To protect individual investments

A corporation is a body or organization formed by a union of two or more entities that come together to do business. The principal reason for forming a corporation is to protect individual investments, and this is easily achieved since a corporation is recognized and treated as a single body, both by law and other businesses.

A corporation is seen as a single entity that is separate from each of the individuals that own it, and as such, has the same rights as a single entity. Corporations are created for a specific purpose: to do business, although they can be involved in other activities such as developing projects and so on.

A corporation, unlike single individuals, can generate income from a variety of unlimited sources, and helps to protect its owners: both the losses suffered and profits gathered are shared amongst the owners.

2 years ago