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.