Economics · Banking and Finance
For a bank extending a loan to a Sole Proprietorship, which statement regarding the proprietor's liability and the loan agreement is most accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The firm has perpetual succession, despite the proprietor's unlimited liability.
- 2The proprietor has unlimited liability, and the loan is legally a personal obligation of the proprietor, with both business and personal assets available for recovery.✓
- 3The proprietor has limited liability, and the loan agreement is separate from the individual's personal capacity.
- 4The proprietor has limited liability, and the loan is generally secured by the firm's assets only.
Correct answer
The proprietor has unlimited liability, and the loan is legally a personal obligation of the proprietor, with both business and personal assets available for recovery.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Banking and Finance MCQs →Want more practice questions on Banking and Finance?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Banking and Finance