Which form of liability means owners' personal assets are at risk for all debts?

• A. Limited Liability
• B. Double Liability
• C. Unlimited Liability
• D. Shared Liability

Answer: (C)

Liability and personal assets come into play when a business owes money. With unlimited liability, owners are personally responsible for all the debts of the business. If the business can’t pay, creditors can claim the owners’ personal assets to cover the debts, such as savings or a home. This is common in sole traders and general partnerships. In contrast, limited liability protects personal assets beyond what the owner has invested, so only the invested capital is at risk. Terms like double liability or shared liability aren’t standard in GCSE Business Studies and don’t describe the situation where personal assets are exposed to all debts. So, the form where personal assets are at risk for all debts is unlimited liability.