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Home Questions 9CWERFMYX7
Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Accounting for Shares

Question:

How is a company's legal entity distinct from its members?

Options:

Members have unlimited liability for company debts

Members share personal assets with the company

The company's existence is tied to its members

The company is treated as a separate entity in law

Correct Answer:

The company is treated as a separate entity in law

Explanation:

The correct answer is option 4- The company is treated as a separate entity in law.


A company has a separate legal entity which is distinct and separate from its members. It can hold and deal with any type of property. It can enter into contracts and even open a bank account in its own name.

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