What is the liability of Sole proprietors?

The correct answer is option 2- Unlimited.

Sole proprietorship refers to a form of business organisation which is owned, managed and controlled by an individual who is the recipient of all profits and bearer of all risks. Sole proprietors have unlimited liability. This implies that have to bring in Rs. 20,000 from her personal sources even if she has to sell her personal property to repay the firm’s debts.