AIC Certified Associate Constructor (CAC) Practice Exam

In a corporation, owners have limited liability because the company is a separate legal entity. This means shareholders are not personally responsible for the firm’s debts beyond their investment in the stock. Personal assets are generally protected from corporate creditors, which is a fundamental advantage of the corporate form. There are exceptions, such as when the corporate veil is pierced for fraud, undercapitalization, or improper mixing of personal and corporate funds, in which case owners could be held personally liable. The other statements do not fit because directors and officers can be liable for breaches of fiduciary duty or illegal acts, corporate debts are not automatically collectible from personal assets, and owners are not personally liable for all debts simply by virtue of ownership.