Question

jill owns a retail business by herself as a sole proprietor and was sued by a customer who fell in the store. the customer claimed the business was negligent in caring for its floors. which statement best describes jill's potential liability?

Answer 1

Statement that best describes jill's potential liability is Jill can only be liable to the amount she initially invested in the business.

What is meant by Potential Liability?

A contingent obligation is a possible duty that might materialize in the future, such as paying out on product guarantees or litigating ongoing disputes. Liabilities should be noted in a firm's accounting records if they are likely to materialize and their value can be ascertained with reasonable certainty.

Contingent liabilities are potential obligations that are dependent on upcoming occasions and result from earlier occasions. There is no need for a journal or even any disclosure in the books of accounts when the possibility of a contingent obligation is low.

A contingent liability is a financial obligation that might become due to the outcome of an unforeseeable future occurrence.

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