Question

If business fails, then the creditors can recover their dues not only from the business assets, but also from the personal assets of the proprietor. Which feature of sole proprietorship is applied here?

• A. Quick formation
• B. Unlimited liability
• C. No control
• D. No separate entity

Answer 1

The Correct Option is B

Unlimited liability signifies that the owner is personally accountable for business debts if the enterprise cannot repay them, potentially requiring the use of personal assets. This is a key characteristic of a sole proprietorship.