Future Business Leader Achievments (FBLA) Economics Practice Exam

Disable ads (and more) with a membership for a one time $4.99 payment

Prepare for the FBLA Economics Exam. Engage with detailed explanations and multiple choice questions to boost your understanding of economics concepts. Maximize your success on exam day!

Practice this question and more.

Which type of business organization offers the most protection from personal liability?

Proprietorship
Partnership
Corporation
Cooperative

The correct answer is: Corporation

The corporation is the type of business organization that provides the most protection from personal liability for its owners. This is primarily due to the legal structure of a corporation, which is considered a separate legal entity from its shareholders. As a result, liabilities incurred by the corporation do not extend to the personal assets of the shareholders. If the corporation faces lawsuits or debts, the shareholders are typically only at risk of losing their investment in the corporation rather than their personal assets. Additionally, corporations often have more defined legal protections and corporate governance structures in place, which can further insulate shareholders from personal liability. These protections are not available in sole proprietorships or partnerships, where owners can be personally liable for business debts and legal obligations. In those business forms, the personal assets of the owners may be at risk, making them less secure from a liability standpoint. Cooperatives, while they do offer some limited liability protections, do not match the comprehensive protections provided by corporations.