Name the form of ownership which is run with principle of mutual trust. Explain
its two merits and two demerits.
Answers
Hello !
A partnership is built around the principle of mutual trust, confidence and understanding between partners.
Merits of partnership firm
1.Easy to start and dissolve
A partnership firm can be setup easily and quickly. There is not much legal formalities and expenditures are involved in the establishment of a partnership. Similarly, a partnership firm can be closed down very easily and quickly.
2.Higher capital
Many partners invest capitals and there is higher flexibility in capital because new partner can be agreed to be associated and investing can be increased.
Demerits of partnership firm
1.No Business secrets
The partner can keep the secrets to himself but these secrets can be known to competitors or others when there is conflict among the partners
2.Uncertain existence
Death of any partner can sometime cause death of entire firm. Dishonesty, conflict and lack of resource also can collapse the firm.
Hope It Helps u :)