Question

A business partner whose potential financial loss in the partnership will not exceed his or her investment in that partnership is called a:_______. a) General partner. b) Sole proprietor. c) Limited partner. d) Corporate shareholder. e) Zero partner.

Answer 1

Answer:

c) Limited partner

Explanation:

Partnership is a form of business wherein two or more individuals agree to carry out a business, mutually agreeing to share profits and losses in agreed profit sharing ratio as per the clauses in partnership deed.

Apart from in Limited liability form of partnership, partners are subject to unlimited liability which means in case of excessive losses, their personal assets such as cars or houses can be taken away as well.

Limited liability partnership(LLP) is a form of partnership wherein the loss of partners are limited to the amount of their respective investments.