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
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