A corporation is a business that is legally separate and distinct from its owners.

• A. Yes, a corporation is legally separate.
• B. No, a corporation is the same as its owners.
• C. Only in certain jurisdictions.
• D. A corporation and its owners share liability.

Answer: (A)

A corporation has a separate legal personality, meaning it is a distinct entity from its owners. This allows the company to own assets, enter contracts, sue or be sued in its own name, and incur liabilities independently of the shareholders. Because of this separation, owners typically aren’t personally responsible for the corporation’s debts—their risk is limited to their investment. That’s why the statement is true.

If the business and the owners were the same, there would be no separate entity, which isn’t how corporations operate. Saying this applies only in certain jurisdictions ignores the general, widely recognized principle of corporate law. The idea that owners share liability would contradict the usual concept of limited liability, except in rare cases where the corporate veil is pierced.