Question

.Rhonda has agreed to invest $16,000 in a partnership with her sister and brother-in-law. Rhonda does not plan to work in the partnership, nor does she wish to risk any of her own wealth other than the $16,000 she invests, but she does intend to share in any profits earned by the partnership. Evidently, Rhonda will be a: 1) restricted partner. 2) preferred stockholder. 3) secondary partner. 4) limited partner

Answer 1

Answer:

The correct answer is option 4.

Explanation:

Rhonda has agreed to invest $16,000 in a partnership with her sister and brother-in-law. she does not plan to work in partnership or invest any of her wealth other than $16,00. But she intends on sharing profits. This implies that Rhonda is a limited partner in the business.

A limited partner is a partial owner of a business. His/her liability to the business's debts is limited to the extent of the amount he/she has invested in the business. Such partners are often called silent partners as they don't have any involvement in the day to day operations.