CAPE MOB Unit 1 Practice Questions - CAPE Management Of Business Unit 1 Exam

A sole trader faces 'unlimited liability'. What does this mean for the business owner?

The owner is only liable for the amount they invested in the business. The owner's personal assets can be seized to pay off business debts. The business can borrow an unlimited amount of money from commercial banks. The owner can easily transfer their liability to partners if the business fails.

Correct Answer:

The owner's personal assets can be seized to pay off business debts.

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