Question

Owners of the business who contribute money to the business take more risk than creditors who loan money to the business. This statement is:

Answer 1

The given statement is true.

Step-by-step explanation:

Owners of the business always takes huge risk. Business are successful only if the owner takes risk which is huge.

To justify the statement, the creditor

• will provide loan only if the owner has the background to pay back the money
• the owner has to pledge or show proof to claim money from his asset if the business goes in loss or if the owner is not repaying the money
• the creditor can even question the witness if the money is not repaid by the owner
• also assess whether the business run by the company stands with all legal activities

So a creditor is at the safe zone to get back the money even if huge loss occurs. But the owner is at the great risk because he will be final looser if he lose the business.