Define partnership firm. Explain its merits and demerits.
Answers
merits
.easily to stabilize
.maximize the profit
demerits
.bias
.lack of continuity
Answer:
As per the question
Partnership Firm : A partnership is an unincorporated business owned by two or more partners A partnership often is referred to as a firm
* Partnership firm is an agreement between two or more persons who have agreed to profits and losses of the business carried on by ball or any one of them acting upon all. " -as per Sec ( 4 ) . partnership act 1932.
Merits of Partnership Firm :
Easy information : registration or incorporation is not required in case of partnership firm LLP or company. it can be formed without any legal formalities and expenses . they are simple and economical to firm
Large resources : Due to more number of partners the partnership firm has larger resources for business operations as compared to sole proprietorship firm
Flexibility in operation : Due to limited number of partner there can amend any objectives or change any operations any time by mutual consent
Sharing: In partnership every partner bears the risk individual as it is easier compared to sole proprietorship
Demerits of Partnership Firm :
Instability : a partnership firm does not exists for an indefinite period of time the death insolvency or lunacy of a partner may lead to dissolution of the partnership firm
Limited Capital : due to restriction on the maximum number of members, a limited amount of a capital can be raised
No legal status : A partnership firm does not have a legal status like a joint status like or LLPr company