GK
BUSINESS MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Debts stay in the business
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Finances of the business are treated as inseparable from the finances of the business owners
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Either A or B
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None of the above
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Detailed explanation-1: -Unlimited liability refers to the full legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners’ personal assets, which is different than the popular limited liability business structure.
Detailed explanation-2: -Unlimited liability is when one or more business owners or partners are liable for their company’s debts and tax compliance. It is very different to a limited liability company (LLC), whose business structure is designed specifically to insulate individual partners or stakeholders from risk.
Detailed explanation-3: -In unlimited liability businesses, the owners and partners are wholly responsible for their company’s debts and all other financial commitments. An example of unlimited liability is where a sole owner is responsible for a business, making themselves and the business entity one and the same thing.
Detailed explanation-4: -It means that a partner is liable jointly and also separately fro all the debts of the firm. His private assets can be used for paying off the firm’s debts.