Which term describes a business structure that is legally separate from its owners and can issue stock?

• A. Sole Proprietorship
• B. Partnership
• C. Cooperative
• D. Corporation

Answer: (D)

A corporation is a business structure that is legally separate from its owners and can issue stock. Because it’s its own legal entity, it can own property, enter contracts, sue or be sued, and owners have limited liability—their personal assets are generally protected beyond their investment. It raises capital by selling stock to investors, and those shares can be bought and sold, allowing ownership to be transferred.

Sole proprietorship has a single owner and isn’t a separate legal entity, so there’s no stock to issue. A partnership involves two or more owners who share profits and liabilities and isn’t typically a separate entity that issues stock. A cooperative is owned by its members who use its services; while it may issue shares in some cases, its primary structure and purpose differ from a standard stock-issuing corporation.