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 means that if the business fails to repay its debts, the proprietor is personally responsible for covering those debts, even using personal assets if necessary. This is a defining feature of a sole proprietorship.