Which term describes a person who provides capital to a business but does not take part in day-to-day management?

Which term describes a person who provides capital to a business but does not take part in day-to-day management?

• A. Sleeping Partner
• B. Entrepreneur
• C. Partnership
• D. Enterprise

Answer: (A)

Think about someone who puts money into a business but stays out of the daily running of it. That person is described as a sleeping partner, or silent partner. They provide capital and may share in profits (and losses) but do not take part in managing the business day-to-day. This helps distinguish them from an entrepreneur, who actively starts and runs the business; from a partnership as a business setup where partners usually participate in management; and from enterprise, which is the broader idea of a business venture rather than a person.

Think about someone who puts money into a business but stays out of the daily running of it. That person is described as a sleeping partner, or silent partner. They provide capital and may share in profits (and losses) but do not take part in managing the business day-to-day. This helps distinguish them from an entrepreneur, who actively starts and runs the business; from a partnership as a business setup where partners usually participate in management; and from enterprise, which is the broader idea of a business venture rather than a person.