Entrepreneurship and Small Business (ESB) Certification Practice Exam

What is the term for an agreement where profits are shared among members but not all responsibilities are equal?

1. General Partnership

2. Limited Partnership

3. Joint Venture

4. Cooperative

The correct answer is: Limited Partnership

The term that describes an agreement where profits are shared among members but not all responsibilities are equal is 'Limited Partnership.' In this type of partnership, there are general partners and limited partners. General partners manage the business and have unlimited liability, meaning they are fully responsible for the debts and obligations of the partnership. On the other hand, limited partners contribute capital and receive a share of profits, but their involvement in management and liability is limited to their investment in the partnership. This structure allows for flexibility in how responsibilities and profits are allocated among the members. In contrast, a general partnership involves all partners sharing equally in managing the business and are jointly responsible for the obligations. A joint venture refers to a temporary partnership formed for a specific project or goal, and members typically share responsibilities and profits equally. A cooperative is an organization owned and operated for the benefit of those using its services, where members usually share control and profits equally, which does not align with the concept of unequal responsibilities.