Which of the following is NOT an advantage of a Corporation?

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Study for the Texas Aandamp;M University (TAMU) ACCT229 Exam. Get exam-ready with flashcards, detailed explanations, and multiple choice questions. Enhance your understanding and boost your confidence!

A corporation is a legal entity that is distinct from its owners, which brings several advantages. Limited liability, continuity of life, and the ability to raise large capital are key benefits that attract entrepreneurs and investors.

Limited liability means that the personal assets of shareholders are protected from the corporation's debts and liabilities. This protection encourages investment, as shareholders can invest without risking personal financial ruin.

Continuity of life indicates that a corporation can continue to exist independently of its owners or shareholders. If a shareholder leaves or passes away, the corporation can still operate, ensuring stability and longevity in business operations.

The opportunity to raise large capital is another significant advantage for corporations. They can issue stocks and bonds, attracting a wide range of investors and making it easier to gather substantial funds for expansion or projects.

Unlimited liability, on the other hand, is a characteristic associated with sole proprietorships and partnerships, not corporations. In entities with unlimited liability, owners are personally responsible for all debts, which can lead to financial risks that deter individuals from starting such businesses. Thus, stating that unlimited liability is an advantage of a corporation is incorrect, as it contradicts the fundamental principles of how corporations operate and their intended benefits.