Duplicate of 1.4 GCSE Business - Liablity test!

Question 1

In business, who has 'unlimited liability'?

Accepted Answer

Sole traders AND partners

Question 2

What is a sole trader?

Accepted Answer

The single owner of a business (self employed)

Question 3

Unlimited liability means being responsible for all debts, what does 'limited liability' mean?

Accepted Answer

Debts are limited to the amount invested in a business

Question 4

What does the term 'liability' mean in business terms?

Accepted Answer

The identity who is legally responsible for financial debts

Question 5

What does the word 'liable' mean?

Accepted Answer

To take the blame; to be responsible for something

Question 6

In law, are company owners seen as having the same financial identity as their business?

Accepted Answer

No - they are seen as separate people to the business

Question 7

What does 'unlimited liability' mean?

Accepted Answer

When all debts must be repaid, regardless how large

Question 8

Sole traders/partnerships have unlimited liability & companies have limited liability!

Accepted Answer

TRUE

Question 9

In law, are partners seen as having the same financial identity as their business?

Accepted Answer

Yes - they are seen as the same people as the business

Question 10

Why might someone want to form a company, instead of remaining as a sole trader?

Accepted Answer

To limit the amount of debt they are liable for

Question 11

So, if a sole trader or partnership has 'unlimited liability', what does that mean?

Accepted Answer

Individuals involved are personally liable for their debts

Question 12

So, how does a sole trader (or partnership) become a company?

Accepted Answer

They register their business details with Companies House

Question 13

So, 'limited liability' means that the financial liability (who is liable for the debts) is:

Accepted Answer

Limited to the amount invested into the business by an owner

Questions 13