Which entity is owned by stockholders and chartered under state law?

• A. Proprietorship
• B. Cost
• C. Cash Receipts
• D. Corporation

Answer: (D)

A corporation is a business entity that is owned by stockholders who hold shares of stock and is created by a charter issued by the state. This makes the corporation a separate legal entity from its owners, capable of entering contracts, suing or being sued, and continuing beyond the involvement of any individual founder. Stockholders’ liability is usually limited to their investment in the company, which is a key feature of the corporate form. This distinguishes it from a proprietorship, which is owned by one person and lacks a separate legal status and limited liability. The other terms listed are not business structures: a proprietorship refers to a sole-owned business, while cost and cash receipts are financial concepts, not entities.