Question

Three brothers of a family own a furniture showroom. Each of them is actively involved in handling the day-to-day business activities. However, when the business suffered huge losses at the end of the last fiscal year, the personal wealth and assets of the brothers did not get affected. This is most likely because the brothers have a _________.

Answer 1

Answer:

Limited liability

Explanation:

Limited liability is a concept that states that in the event of loss or financial insolvency of a business  the maximum amount to be lost by the owners would be restricted or limited only  to the amount that they have invested in the business.

This concepts illustrates the fact that the business is a separate legal entity which is different from its owners. And therefore the assets and liabilities of the business are different form those of its owners.

The concept is common with businesses which operate under the form of either limited partnership or limited liability companies (either private or public)

This is most likely because the brothers have a Limited liability