Liability Flashcards
1
Q
Define unlimited liability?
A
the owners of a business are entirely responsible for its debts, no matter the value
2
Q
What is the main benefit of having unlimited liability?
A
- business remain in control of the business and get all profits
3
Q
What is limited liability?
A
a persons financial liability is limited to a fixed sum, most commonly the value of the investment
4
Q
What is the downside of limited liability?
A
- scope for fraud ( putting business in liquidation before customers receive service they paid for
5
Q
What are some sources of finance for an unlimited liability business?
A
- owners capital
- bank finance
- leasing
- trade credit
- retained profits
6
Q
Sources of finance for limited liability companies?
A
- share capital
- bank finance
- angel / venture capital
- peer to peer lending
