Question : Debts which the firm owes to outsiders are known as the firm's debts, whereas the debts which a partner owes in his personal capacity are known as___________.
Option 1: Firm's debt
Option 2: Private debt
Option 3: Capital
Option 4: None of the above
Answer (1)
24th Jan, 2024
Correct Answer: Private debt
Solution : Answer = Private debt
Private debt refers to the obligations or loans that an individual partner personally owes, distinct from the debts of the firm itself. It reflects the personal financial liabilities of the partner rather than those of the business entity.
Hence, the correct option is 2.
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