On the basis of liability of its members, the company cannot be classified into which of the following category:
Answer & explanation
Correct answer: option 3
Correct answer: Option (3) → Company Limited by Debt
Concept: Classification of companies on the basis of members’ liability, from Accounting for Share Capital.
On the basis of liability, a company can be of three kinds only: company limited by shares, company limited by guarantee, and unlimited company. There is no category called “company limited by debt.” Since the question asks which class it CANNOT be, Option (3) is correct.