2.1.3 Liability

Question 1

What type of businesses have unlimited liability?

Answer 1

• Sole traders
• Partnerships

Question 2

What type of businesses have limited liability?

Answer 2

• private limited companies
• public limited companies
• franchises

Question 3

What is unlimited liability?

Answer 3

When the business owner or owners are personally responsible for all the debts of the business, no matter the value.
Paying the debts may mean selling their own personal assets to find the money.

Question 4

What is limited liability?

Answer 4

When the business owners can only lose the original amount they invested in the business if it fails.