Unlimited liability means

Unlimited liability means

• A. The business is legally separate from the owner
• B. The owner is not responsible for debts
• C. The business and the owner are the same legal entity
• D. Only business assets can be used to pay debts

Answer: (C)

Unlimited liability means there is no legal distinction between the owner and the business. If the business owes money or is sued, the owner can be personally responsible, so personal assets could be at risk. That’s why the statement that the business and the owner are the same legal entity matches this idea. The other ideas describe a situation where the business is kept separate from the owner or where only business assets would be at risk, which is not the case with unlimited liability.

Unlimited liability means there is no legal distinction between the owner and the business. If the business owes money or is sued, the owner can be personally responsible, so personal assets could be at risk. That’s why the statement that the business and the owner are the same legal entity matches this idea.

The other ideas describe a situation where the business is kept separate from the owner or where only business assets would be at risk, which is not the case with unlimited liability.