Asked by Judeline Adolphe on May 23, 2024
Verified
Ruben invested $40,000 in a partnership with Clark and Louis. Ruben's contract with the partnership states he will receive a portion of partnership profits, but he will be liable for partnership's debts only to the extent of the $40,000 he invested. Ruben is:
A) a general partner.
B) a dormant partner.
C) a limited partner.
D) an aggregate partner.
Dormant Partner
A business partner who does not participate in the day-to-day management of the partnership but still shares in its profits and losses.
Limited Partner
An investor in a partnership who has limited liability to the extent of their investment in the company and does not participate in daily business operations.
- Identify the differences between distinct partner categories and outline their rights, responsibilities, and liabilities in the context of a partnership.
Verified Answer
TS
tsuyoshi shibataMay 24, 2024
Final Answer :
C
Explanation :
Ruben is a limited partner because he receives a portion of the partnership's profits and his liability for the partnership's debts is limited to the extent of his investment, which is a characteristic of limited partners.
Learning Objectives
- Identify the differences between distinct partner categories and outline their rights, responsibilities, and liabilities in the context of a partnership.