a) Under Sole proprirtorship, the owner receives all profits and sustains all losses. Here, the Owner
has unlimited liability. Therefore, he is responsible for all the unpaid debts. His total wealth can be
taken to satisfy the debts.
b) If the Company is a 50-50 partnership company, then
In Partnership,all partners have unlimited liability and each partner is legally liable for the unpaid
debts according to the partnership. Here, the two partners are equally liable for the unpaid debts.
Each partner is legally liable for $30,000 of the unpaid debts.
c) In Corporations, owners have limited liability which guarantees that they cannot lose more than
what they have invested. Here, the invested amount is calculated as a percentage of the total
investment. Since the total investment is not given, the person cannot lose more than what he has
Summary of Cash
for the month of Aug
Total Inflows - (I)
Total Cash Outflow - (II)
Net Cash Flow (I)-(II)
Jane has surplus funds of $ 593 which should be invested to earn interest @ 5 % p.a. for an
additional cash inflow.