2.1.3 Liability Flashcards
1
Q
What is limited liability
A
An investors liability/ financial commitment is limited to the total amount invested or promised in share capital. Investors personal belongings beyond this venture are protected.
2
Q
What is unlimited liability
A
When the owners of a business are responsible for the total amount of debt of the business. The owner may lose their personal belongings such as home and car, if their value is needed to cover the debts of the business
3
Q
Is unlimited liability seen as low or high risk?
A
High!!!!!
