A partner who contributes capital and shares in profits but does not take an active role in management is called a

A partner who contributes capital and shares in profits but does not take an active role in management is called a

• A. Active partner
• B. Sleeping partner
• C. Silent partner
• D. Limited partner

Answer: (B)

In partnerships, partners are defined by how involved they are in running the business. A partner who contributes capital and shares in profits but does not participate in management is called a sleeping partner. The term captures the idea that they stay out of day-to-day decisions while still benefiting from the profits. Active partners are involved in management, so that doesn’t fit. A limited partner appears in limited-partnership structures and has liability limited to their investment, often without managing the business, but the scenario focuses on the lack of management rather than liability. A silent partner is another label sometimes used for someone who doesn’t manage, but the wording commonly used in this context is sleeping partner.

In partnerships, partners are defined by how involved they are in running the business. A partner who contributes capital and shares in profits but does not participate in management is called a sleeping partner. The term captures the idea that they stay out of day-to-day decisions while still benefiting from the profits.

Active partners are involved in management, so that doesn’t fit. A limited partner appears in limited-partnership structures and has liability limited to their investment, often without managing the business, but the scenario focuses on the lack of management rather than liability. A silent partner is another label sometimes used for someone who doesn’t manage, but the wording commonly used in this context is sleeping partner.