Question

Unlimited liability means a. stockholders can borrow money from the business. b. there is no limit on the amount an owner can borrow. c. the business can borrow money for any type of purchase. d. the owner is responsible for all business debts. e. creditors will absorb any loss from nonpayment of debt.

Answer 1

Answer:

Option D, the owner is responsible for all business debts.

Explanation:

Unlimited liability refers to the fill legal responsibility that business owners and partners assume for all business debts. This liability is not capped, and obligations can be paid through the seizure and sale of owners' personal assets, which is different than the popular limited liability business structure.

Unlimited liability simply means one could be exposed to losses that result from company debts. In this situation, the business owner can be held personally for back business debts.

Creditors (persons to which a debt is owed) will not absorb any loss from non-payment of debt because if the business were to run out of money due to debt, the creditors may file a lawsuit and the owner is forced to pay.

Therefore, the options that best suits the question is option D. Unlimited liability means THE OWNER IS RESPONSIBLE FOR ALL BUSINESS DEBTS.