Which statement describes a Limited Partnership?

Which statement describes a Limited Partnership?

• A. One general partner and at least one limited partner. General partner invest in the business, manage it, and are financially responsible for it. Limited partners are investor who receive a portion of the profits, but who have no say in the management of the company.
• B. A partnership where all partners have equal say
• C. A corporation with limited liability for all
• D. A sole proprietorship with investors

Answer: (A)

In a Limited Partnership, there are two types of partners who play different roles. The general partner runs the business and bears unlimited personal liability for the partnership’s debts and obligations. The limited partners contribute capital and share in profits, but they do not participate in management and their liability is limited to the amount they have invested. This structure keeps day-to-day control with the general partner while protecting the investors from personal liability beyond their investment. This arrangement—at least one general partner who manages and assumes liability, plus one or more limited partners who fund the venture and receive profits but have no say in management—best describes a Limited Partnership. Other descriptions describe different forms: equal say among all partners aligns with a general partnership, a corporation implies liability protection for all and a separate legal entity, and a sole proprietorship with investors isn’t a valid structure because a sole proprietorship involves a single owner without partners.

In a Limited Partnership, there are two types of partners who play different roles. The general partner runs the business and bears unlimited personal liability for the partnership’s debts and obligations. The limited partners contribute capital and share in profits, but they do not participate in management and their liability is limited to the amount they have invested. This structure keeps day-to-day control with the general partner while protecting the investors from personal liability beyond their investment.

This arrangement—at least one general partner who manages and assumes liability, plus one or more limited partners who fund the venture and receive profits but have no say in management—best describes a Limited Partnership. Other descriptions describe different forms: equal say among all partners aligns with a general partnership, a corporation implies liability protection for all and a separate legal entity, and a sole proprietorship with investors isn’t a valid structure because a sole proprietorship involves a single owner without partners.