 Hello, in this lecture, we will define unlimited liability. According to fundamental accounting principles, while the 22nd edition, the definition of unlimited liability is legal relationship among general partners that makes each of them responsible for partnership debts if the other partners are unable to pay their shares. When we're thinking about the unlimited liability in this context, we are clearly thinking about the type of business structure of a general partnership. A general partnership being a type of organization where two or more partners start to form a business in which they have profit generating intentions. They intend to generate profits, therefore they will be a partnership unless they set up some other type of entity, unless they try to incorporate, create an S corporation or an LLC. If they have a business intent and start doing business in order to generate revenue, they are then a partnership such as these two individuals here joining together in the restaurant business. They would be a partnership within the restaurant business, a general partnership. The benefits of a general partnership are that easy to setting up. It's great that we can just set those up fairly easily. The drawbacks of a general partnership are that we have this unlimited liability. Unlimited liability in the sense that the partnership unlike a C corporation is not a separate legal entity. We'll try to keep the books separate in order to keep the best records, but it's not a separate legal entity and therefore the partner's individual assets could be subject to more liability risk than would be the case in a separate legal entity such as a corporation. Also the partners themselves act as agents of the business of the partnership. So if either partner decided to get into a contract, then the other partner is then liable for that contract as a partner within the partnership. So those are some things to keep in mind and aware of when we have the partnership type of arrangement. If we compare that to the corporation, the corporation is going to be a separate legal entity from the owners, which in this case would be the shareholders. Main reason for doing that is it provides more liability protection for the shareholders or one of the main reasons for forming a corporation forms more liability protection to the shareholders. It is the case from an accounting standpoint that we're going to keep the books separate in either case so that we can track the books, but the corporation is actually a separate legal entity has separate ownership of the resources of the corporation.