Utah General Contractors - Business and Law Practice Exam

Which type of partnership includes a partner contributing funds or property but not involved in day-to-day operations?

1. General Partnerships

2. Limited Partnerships

3. S Corporations

4. Joint Ventures

The correct answer is: Limited Partnerships

The correct choice indicates a limited partnership, which is characterized by having one or more general partners who manage the business and have unlimited liability, alongside one or more limited partners who contribute capital or assets but are not involved in the everyday operations of the business. Limited partners enjoy the benefit of liability protection, meaning their financial liability is limited to the amount they invested in the partnership. In contrast, general partnerships involve all partners participating in management and sharing equal responsibility for the liabilities of the partnership. S corporations are a type of corporation that allows income to pass through to shareholders and typically entail more regulatory structure than partnerships. Joint ventures generally involve two or more parties working together on a specific project, where all parties typically participate in management, making them more akin to a temporary partnership rather than the defined roles seen in limited partnerships.