Introductory Business Law CLEP Prep Practice Exam

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Prepare for the CLEP Business Law Exam with flashcards and multiple-choice questions. Each question comes with hints and explanations to help you succeed. Master the content and pass your exam!

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What is a corporation?

Type of limited liability company
A group of unrelated business units
A business entity owned by a single person
A partnership between two or more people

The correct answer is: Type of limited liability company

A corporation is a type of business entity that is legally separate from its owners. This means that the owners, or shareholders, have limited liability for the debts and actions of the corporation. This is different from a partnership (D) or a business owned by a single person (C), where the owners have unlimited liability. Option B is incorrect because a corporation is not necessarily made up of multiple business units. It is a singular entity.