Final answer:
The difference between limited and general partnerships lies in management and liability. Limited partners just contribute capital, whereas general partners are involved in management and bear personal liability for debts.
Step-by-step explanation:
Differences Between General and Limited Partnerships
The primary distinction between a limited partnership and a general partnership revolves around the involvement and liability of the partners. A limited partnership includes both partners who actively manage the business, known as general partners, and ones who serve as passive investors, known as limited partners. Limited partners typically only contribute capital and are only liable for what they have invested in the business, hence they do not manage day-to-day operations and are protected against personal asset loss in cases of business failure.
Conversely, in a general partnership, all partners share in the management and the responsibility for the business. General partners bear personal liability, and the debts of the business can affect their personal assets. This type of partnership is characterized by shared profit distribution and joint decision-making, but it also means shared risks.
In view of the question provided, the correct statement is: a) Limited partners only contribute capital.