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SingaporeBusiness StudiesQuick questions
Business Organisation and Environment
Quick questions on Limited liability and incorporation explained: O-Level Business Studies
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is unlimited liability?Show answer
In an unincorporated business, the owner has unlimited liability. There is no legal separation, so the owner is personally responsible for all the debts of the business. If the business cannot pay, creditors can claim the owner's personal assets, including savings and even their home.
What is limited liability?Show answer
In an incorporated company, the shareholders have limited liability. Because the company is a separate legal entity, the shareholders are responsible only for the amount they invested (the value of their shares). If the company fails owing money, shareholders can lose their investment but not their personal assets.
What is consequences of incorporation?Show answer
Incorporation brings benefits and costs:
What is q1?Show answer
Define incorporation. [2 marks]
What is q2?Show answer
Explain why a shareholder in a limited company cannot lose their personal home if the company fails. [3 marks]
What is q3?Show answer
Analyse one drawback of incorporation for the owners of a small business. [4 marks]
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