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JAMB Economics 1985 Question 23

Question 23

Business Organisations

Limited liability means

  1. A.the debts of a company can only be paid from its own assets
  2. B.the debts of the company are paid from business as well as private funds of the owners
  3. C.government cannot tax the company
  4. D.the debts of the company must be paid from private funds only
  5. E.the company does not have to pay its debts.
Show the answer and explanation

Answer: A (the debts of a company can only be paid from its own assets)

Explanation

With limited liability, creditors can claim only the company's assets, not the owners' private property.