Which statement best describes limited partners?
A) They risk their personal wealth in exchange for a controlling share of ownership.
B) They agree to invest their money in the company for a limited time period.
C) They have limited liability for the debts of their company as long as they do not actively participate in management.
D) They cannot own more than 10 percent of the company's stock.

Question

Quizplus · Accepted Answer

Limited partners have limited liability, which means they are only responsible for the debts of their company up to the amount of their investment. This protection is only afforded to them if they do not actively participate in the management of the company. A) is incorrect because limited partners do not typically have a controlling share of ownership. B) is partially correct in that limited partners typically agree to invest their money for a fixed amount of time, but this is not their defining characteristic. D) is incorrect because limited partners can own more than 10 percent of the company.

Which Statement Best Describes Limited Partners