Which of the following statements always apply to corporations?

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BlackTom AI · Accepted Answer

Question restatement: Which of the following statements always apply to corporations?

Option 1: They must have a mission statement filed in Delaware
This is not a universal requirement for corporations. Corporate formalities vary by jurisdiction and type, and a mission statement is not a mandated filing in Delaware or many other places. Therefore, this statement is inaccurate as a universal rule.

Option 2: Managers can be fired with no effect on ownership
This captures a core feature of corporations: ownership (shares) and management (executives) are separate, so removing managers does not inherently change who owns the company. The board or owners can replace management without altering ownership interests. Hence this statement is true in typical corporate structures.

Option 3: Unlimited Liability
Corporations are characterized by limited liability for their shareholders; owners are not personally liable for corporate debts beyond their investment. Unlimited liability is a feature of sole proprietorships or general partnerships, not corporations. Therefore, this is false for corporations.

Option 4: The corporate jet must have as many seats as people on the Board of Directors
This is a humorous or symbolic constraint sometimes joked about, but it is not a legal or structural requirement of corporations. There is no rule tying aircraft seating capacity to board size, so this is incorrect.

Option 5: Limited life
Most corporations, especially in many jurisdictions, have the potential for perpetual existence unless explicitly dissolved. While some corporations can be created with a limited duration, the general doctrine is that corporations do not inherently have a limited life. Therefore, this statement is not universally true.

Option 6: Ownership can be transferred without affecting operations
This reflects the separation of ownership and operations in a corporation. Transfers of shares can occur without changing the day-to-day operations or the running of the business, assuming no change in controlling interests that would trigger other events. Thus this statement is true in standard corporate practice.

Overall analysis: Among the options, the statements that align with core corporate principles are that managers can be fired without affecting ownership and that ownership can be transferred without affecting operations. The other statements do not hold as universal truths about corporations and describe conditions that are either false (unlimited liability; limited life is not inherent) or irrelevant (a mission statement filing in Delaware; corporate jet seating).

MFIN1021.02|.03 Summer 2025 Fundamentals of Finance [Hession-Kunz] Final Exam- Requires Respondus LockDown Browser

Which of the following statements always apply to corporations?

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