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JAMB Economics 1985 Question 25

Question 25

Business Organisations

When a business has unlimited liability

  1. A.all its profits can be taxed away by the government
  2. B.all its assets are owned by the members of its board of directors
  3. C.the business ceases to exist at the death of one of its owners
  4. D.the owners are responsible for all its financial debts
  5. E.the owners are not responsible for all its financial debts.
Show the answer and explanation

Answer: D (the owners are responsible for all its financial debts)

Explanation

Unlimited liability means the owners must pay all the business's debts, even from their private property.