Future Business Leaders of America (FBLA) Business Law Practice Exam

What is the purpose of articles of incorporation?

1. To outline the company's mission

2. To establish the legal existence of a corporation

3. To assign management roles

4. To register trademarks

The correct answer is: To establish the legal existence of a corporation

The purpose of articles of incorporation is to establish the legal existence of a corporation. When a business wants to form a corporation, it must file these articles with the appropriate state authority. This document serves as a legal foundation for the corporation, providing crucial information such as the corporation's name, its purpose, the address of its registered office, and details about its shares and shareholders. The articles of incorporation also help to clarify the extent of the corporation's powers and transactions, ensuring that it operates within the framework of state law. Once filed and approved, the articles of incorporation legally create the corporation as a separate entity, distinct from its owners, which is a key characteristic of corporate structure. Other options don't fulfill the primary function of establishing legal status. While outlining a company's mission, assigning management roles, and registering trademarks are important aspects of business operations, they do not directly pertain to the legal inception of the corporation as outlined by the articles of incorporation.