Final answer:
The correct answer is option B. An LLP is a popular form of organization for accounting firms, which limits a partner’s liability to their investment and offers protection of personal assets. Partners are not liable for each other's misconduct, but are still accountable for business contracts.
Step-by-step explanation:
A Limited Liability Partnership (LLP) is an organizational form that offers certain advantages, especially to professionals such as lawyers and accountants. The statement that an LLP is a popular organizational form for major public accounting firms is correct; many accounting firms opt for this structure due to its benefits.
An important feature of an LLP is that it limits a partner's legal liability primarily to the amount of their investment in the partnership. This implies that partner's personal assets are generally protected in the case of the business's failure. This is in contrast to a general partnership, where each partner can be responsible for the debts and obligations of the business, potentially risking personal assets.
Additionally, within an LLP, the partners are not liable for the misconduct or negligence of other partners, unlike in a general partnership. However, an LLP does not absolve a partner from liability arising from contractual obligations of the partnership; partners can still be held accountable for the business contracts they enter into. Option B accurately reflects the nature of an LLP regarding partners' liability in contrast to the other options provided.