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Which of the following best describes the term 'limited partnership'?

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Question: Which of the following best describes the term \'limited partnership\'?

Options:

  1. A partnership where all partners have unlimited liability
  2. A partnership with at least one general partner and one limited partner
  3. A partnership that is formed for a specific project only
  4. A partnership that does not require a formal agreement

Correct Answer: A partnership with at least one general partner and one limited partner

Solution: 

A limited partnership consists of at least one general partner who has unlimited liability and one or more limited partners who have limited liability.

Which of the following best describes the term 'limited partnership'?

Practice Questions

Q1
Which of the following best describes the term 'limited partnership'?
  1. A partnership where all partners have unlimited liability
  2. A partnership with at least one general partner and one limited partner
  3. A partnership that is formed for a specific project only
  4. A partnership that does not require a formal agreement

Questions & Step-by-Step Solutions

Which of the following best describes the term 'limited partnership'?
  • Step 1: Understand what a partnership is. A partnership is a business arrangement where two or more people share ownership and responsibilities.
  • Step 2: Learn about the two types of partners in a limited partnership. There are general partners and limited partners.
  • Step 3: Know that a general partner is responsible for managing the business and has unlimited liability, meaning they can lose personal assets if the business fails.
  • Step 4: Understand that limited partners invest money in the business but do not manage it. They have limited liability, which means they can only lose the money they invested and are not responsible for the business's debts beyond that.
  • Step 5: Conclude that a limited partnership must have at least one general partner and one or more limited partners.
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