How you will classify partner who invest money in the firm's business and take their share of profits but do not participate in the functioning and management of the business?
A
Active or working partner
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B
Sleeping or dormant partner
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C
Nominal or authorized partner
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D
Partner in profits only
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Solution
The correct option is B Sleeping or dormant partner A partnership
basically refers to the contract between two or more people who have agreed to
carry on certain business in order to achieve common goals.
According to the Partnership Act, Sleeping or dormant partner are the partners who invest their money into the business and share the profit or losses but they do not participate in the functioning and management of the business.