What is true about the liability of a limited partner?

The statement that liability extends only to the limited partner's capital contribution is accurate. In a limited partnership, limited partners enjoy liability protection, meaning they are not personally liable for the debts and obligations of the business beyond the amount they have invested in the partnership. This structure enables individuals to participate in a business venture without risking their personal assets beyond their invested capital.

This limited liability is a foundational feature of limited partnerships, differentiating them from general partnerships, where partners have unlimited personal liability. It allows investors to contribute capital without exposing themselves to the full range of risks that the business may encounter. Thus, as long as limited partners refrain from participating in management and do not take on responsibilities typically assigned to general partners, their liability remains restricted to the funds they have contributed.