A general partner
A)cannot lose more than the amount of his/her equity investment.
B)has less legal liability than a limited partner.
C)faces double taxation whereas a limited partner does not.
D)has more management responsibility than a limited partner.
E)is the term applied only to corporations that invest in partnerships.

Question

Quizplus · Accepted Answer

General partners have more management responsibility than limited partners. Limited partners are typically passive investors who do not participate in the day-to-day management of the partnership.

The other options are incorrect:
A) Incorrect. A general partner can lose more than the amount of his/her equity investment because they have unlimited personal liability for the partnership's debts and obligations.
B) Incorrect. General partners have more legal liability than limited partners. Limited partners have limited liability, which means that they are only liable for the amount of their investment in the partnership.
C) Incorrect. Both general partners and limited partners can face double taxation if the partnership is structured as a corporation for tax purposes.
E) Incorrect. The term "general partner" can apply to any individual or entity that has management responsibility in a partnership, regardless of whether it is a corporation or not.

A General Partner