2.1.3 Liability Flashcards

1
Q

Describe limited liability

A
  • An investor’s liability/financial commitment is limited to the total amount invested or promised in share capital
  • An investor’s personal belongings beyond this venture are protected
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2
Q

Describe unlimited liability

A
  • The owners of a business are responsible for the total amount of debt of the business
  • The owner may lose their personal belongings, e.g. home and cars, if the value of these is needed to cover the debts of the business
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