Question

Select the proper option from the options given below and rewrite the completed sentences.

A proprietor has ________ liability.
(a) unlimited
(b) limited
(c) restricted.

Answer 1

Correct option- a
A proprietorship has unlimited liability.
Explanation:
Under unlimited liability, if the owner fails to pay the debts of the business, then his/her personal property can be utilised to pay the debt. This implies that there is no difference between the property of the owner and the business. The term “unlimited liability” pertains specifically to a sole proprietorship, as the proprietor is solely liable for the debts incurred by the business.