Question 5
Business UnitsThe word "limited" written after the name of a company means that
- A.it has a democratic system of management.
- B.members are liable to the extent of their shareholdings only.
- C.the company is a going concern.
- D.profit is determined by management.
Show the answer and explanation
Answer: B (members are liable to the extent of their shareholdings only.)
Explanation
"Limited" signals limited liability: shareholders can lose only the amount they put into their shares.