Question

Teresa is the sole proprietor of a shoe store. She is also a partner in a restaurant, which has recently been sued for negligence after many people got sick from the salmon Alfredo dinner special. Which of the following statements is true?

Select one or more:
a) Teresa is personally responsible for all liabilities of the shoe store.
b) Teresa's personal assets are at risk in the lawsuit against the restaurant.
c) The restaurant's liabilities are limited to its business assets.
d) Teresa's liability is limited to her investment in the restaurant.

Answer 1

Teresa's personal assets are at risk in the lawsuit against the restaurant, and the liabilities of the restaurant are not limited to its business assets. option b, c, d.

Step-by-step explanation:

In this scenario, Teresa is the sole proprietor of a shoe store and a partner in a restaurant. As a sole proprietor, Teresa has personal responsibility for all liabilities of her shoe store. This means that if there are any debts or obligations associated with the shoe store, Teresa will be personally responsible for them.

Regarding the lawsuit against the restaurant, since Teresa is a partner and not a sole proprietor, her personal assets are at risk in the lawsuit. This means that if the restaurant is found liable and ordered to pay damages, Teresa's personal assets can be used to satisfy those obligations.

To contrast, the liabilities of the restaurant are not limited to its business assets. When a business is organized as a partnership, each partner is responsible for the actions and debts of the partnership, including personal assets. So, the restaurant's liabilities extend beyond its business assets, including the personal assets of the partners like Teresa.

Therefore, the correct statement is:

b) Teresa's personal assets are at risk in the lawsuit against the restaurant.

c) The restaurant's liabilities are not limited to its business assets.

d) Teresa's liability is not limited to her investment in the restaurant.