Question

5. Ritvik is the sole owner of a business of running shoe manufacturing factory. He took a loan of `20lakhs from Gupta Finance Company for the expansion of his business. However, because of continuous losses, he was not able to repay the loan on time. Assets of the business were not enough for repaying liabilities in full. As a result, the company asked him to repay their loan. He refused to do so, on the ground that the loan was taken by his business and not by him for his personal use. The company filed a case against him. The court gave decision in favour of the company .

a) Why did court hold Ritvik responsible for paying his business liabilities out of his personal assets?

b) Identify the characteristic of sole proprietorship which facilitate the sole proprietor to take all decisions related to his business without consulting anybody.

c) When a sole proprietorship firm expands and grows, it faces the problem of limited financial and managerial resources. Explain the two alternatives for solving this problem.

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Answer 1

Answer:

hi rock star ⭐

Explanation:

here is your answer

Ritvik is the sole owner of a business of running shoe manufacturing factory. He took a loan of `20lakhs from Gupta Finance Company for the expansion of his business. However, because of continuous losses, he was not able to repay the loan on time. ... The court gave decision in favour of the company .