Which of the following statements accurately describes limited partnerships?

Limited partnerships are characterized by the involvement of both general and limited partners, each with specific roles and responsibilities. General partners manage the operations and are fully responsible for the partnership’s debts and obligations. On the other hand, limited partners typically contribute capital and have limited liability, meaning their financial risk is restricted to their investment in the partnership. This structure allows individuals to invest in a business without being actively involved in its management, while general partners retain control over operations.

The statement that limited partnerships consist of general partners only does not reflect the dual nature of partnerships. Additionally, while profit maximization is generally a goal of any business, it is not the sole purpose of a limited partnership, as it also serves to allow for different levels of participation and risk. Finally, legal agreements are essential in forming limited partnerships; they outline the roles, responsibilities, and liabilities of each partner, ensuring clarity and protection for all parties involved. Thus, the correct answer accurately captures the essential characteristics and structure of limited partnerships.