Which of the following describes a Limited Liability Partnership?

• A. A firm structure that limits liability of partners.
• B. An audit standard.
• C. A client engagement model.
• D. An insurance policy.

Answer: (A)

A Limited Liability Partnership is a firm structure that limits liability of partners. This means partners can participate in the management and profits of the business, while the personal assets of each partner are protected from the partnership’s debts and obligations beyond their capital contribution. It combines the flexibility of a traditional partnership with liability protection, which is why professional service firms like accounting or law practices often use it. This is different from an audit standard, a client engagement model, or an insurance policy, none of which describe the legal form or liability protection of the business.