Which statement describes a corporation?

• A. A business that is completely owned by one person.
• B. A legal arrangement in which two or more people share ownership.
• C. A business chartered by a state that operates apart from the owner.
• D. A nonprofit organization.

Answer: (C)

A corporation is defined by being a separate legal entity created by a government charter. This means it exists independently of its owners and can own property, enter contracts, sue or be sued, and continue even if ownership changes. The statement that describes this best notes that the business is chartered by a state and operates apart from the owner, capturing the essence of a corporation’s separate legal personality.

This distinguishes it from a sole proprietorship, where one person owns and runs the business, and from a partnership, where ownership is shared among two or more people. The nonprofit option describes a type of organization, but not every nonprofit is a corporation, and the defining feature here is the state charter and separate legal status.