Unlimited Liability Means

question 12

Multiple Choice

Unlimited liability means

• A) there is no limit on the amount an owner can borrow.
• B) creditors will absorb any loss from nonpayment of debt.
• C) the business can borrow money for any type of purchase.
• D) the owner is responsible for all business debts.
• E) stockholders can borrow money from the business.

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Definitions:

Nominal Interest Rate

The interest rate stated on a loan or bond, not adjusted for inflation or other factors that affect the real value of interest earnings.

Inflation Rate

The percentage increase in the general level of prices for goods and services over a specific period, usually a year.

Real Interest Rate

The interest rate adjusted for inflation, representing the true cost of borrowing or the true yield on an investment.

Depreciating

Depreciating refers to the reduction in the value of an asset over time due to factors such as wear and tear or obsolescence.