Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 25 - No. 37)
What does the term 'limited liability' mean in the context of a limited company?
Shareholders are only liable for the amount they invested.
The company is limited in the amount it can borrow.
The company is only liable for its debts.
The owners' personal assets are at risk for the company's debts.
Explanation
Limited liability means the shareholders' personal assets are protected from the company's debts.
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