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
2
Q
what does liquidated mean
A
turned into cash
3
Q
give 4 appropriate sources of finance for business’ with unlimited liability
A
- bank finance (loan or overdraft)
- leasing
- trade credit
- retained profit
4
Q
give 4 appropriate sources of finance for a business with limited liability
A
- share capital
- angel/venture capital
- bank finance (loans need to be backed up)
- retained profit
5
Q
benefits of starting a business with unlimited liability
A
- can keep all the profit
- full control over business
- private records