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Which of the following best describes a limited partnership?

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Question: Which of the following best describes a limited partnership?

Options:

  1. All partners have unlimited liability.
  2. Only one partner has unlimited liability.
  3. All partners are involved in management.
  4. Partners share profits equally.

Correct Answer: Only one partner has unlimited liability.

Solution: 

In a limited partnership, only one partner has unlimited liability while others have limited liability.

Which of the following best describes a limited partnership?

Practice Questions

Q1
Which of the following best describes a limited partnership?
  1. All partners have unlimited liability.
  2. Only one partner has unlimited liability.
  3. All partners are involved in management.
  4. Partners share profits equally.

Questions & Step-by-Step Solutions

Which of the following best describes 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 the types of partners in a limited partnership. There are two types: general partners and limited partners.
  • Step 3: Know that general partners have unlimited liability. This means they are personally responsible for all the debts of the business.
  • Step 4: Understand that limited partners have limited liability. This means they are only responsible for the business debts up to the amount they invested.
  • Step 5: Conclude that in a limited partnership, there is at least one general partner with unlimited liability and one or more limited partners with limited liability.
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