Liability 2.1.3 Flashcards

1
Q

what happens if a business with unlimited liability falls into debt

A

creditors can get the court to force the owners to pay their debts by selling their houses, cars, and other personal possessions - if they still cannot pay, they could be made personally bankrupt

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2
Q

what does liquidated mean

A

turned into cash

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3
Q

give 4 appropriate sources of finance for business’ with unlimited liability

A
  1. bank finance (loan or overdraft)
  2. leasing
  3. trade credit
  4. retained profit
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4
Q

give 4 appropriate sources of finance for a business with limited liability

A
  1. share capital
  2. angel/venture capital
  3. bank finance (loans need to be backed up)
  4. retained profit
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5
Q

benefits of starting a business with unlimited liability

A
  • can keep all the profit
  • full control over business
  • private records
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