What is a key characteristic of a limited partnership?
Practice Questions
Q1
What is a key characteristic of a limited partnership?
All partners have unlimited liability
At least one partner has limited liability
All partners are involved in management
It requires a formal written agreement
Questions & Step-by-Step Solutions
What is a key characteristic of a limited partnership?
Step 1: Understand what a partnership is. A partnership is a business arrangement where two or more people share ownership.
Step 2: Learn about limited partnerships. In a limited partnership, there are two types of partners: general partners and limited partners.
Step 3: Identify the role of general partners. General partners manage the business and have unlimited liability, meaning they are personally responsible for all debts.
Step 4: Identify the role of limited partners. Limited partners invest money but do not manage the business. They have limited liability, meaning they are only responsible for the business debts up to the amount they invested.
Step 5: Conclude that a key characteristic of a limited partnership is that at least one partner has limited liability.
