Unlimited liability means
A) there is no limit on the amount an owner can borrow.
B) creditors will absorb any loss from nonpayment of debt.
C) the business can borrow money for any type of purchase.
D) the owner is responsible for all business debts.
E) stockholders can borrow money from the business.

Question

Quizplus · Accepted Answer

Unlimited liability means that the owner is personally responsible for all business debts, regardless of the amount. This means that if the business cannot pay its debts, the owner's personal assets can be used to pay off those debts. Therefore, option D is the correct choice. Options A, C, and E are incorrect as they do not relate to the concept of unlimited liability. Option B is incorrect, as it implies that the creditors will suffer losses, which is not the case with unlimited liability.

Unlimited Liability Means