QAEconomics › Why were corporations formed?
Q

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

A

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
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