*Partnership form of business organization has outlived its utility- it must go." Comment on
the validity of the statement.
Answers
Explanation:
Partnership Definition
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations.
Partnership
In India, we have a definite law that covers all aspects and functioning of a partnership, The Indian Partnership Act 1932. The act also defines a partnership as “the relation between two or more persons who have agreed to share the profits from a business carried on by either all of them or any of them on behalf of/acting for all”
So in such a case two or more (maximum numbers will differ according to the business being carried) persons come together as a unit to achieve some common objective. And the profits earned in pursuit of this objective will be shared amongst themselves.
The entity is collectively called a “Partnership Firm” and all the individual members are the “Partners”. So let us look at some important features.
This is the right answer for your question.
The statement has a dual effect.
- A partnership has a finite life span and must be legally dissolved upon retirement, death, bankruptcy, or whether any partner requests it.
- When there are more investors in a company, the chances of either of these things happening are far higher than if it were a sole proprietorship.
- However, a partnership has various advantages and can be considered as a vital form.
- It is easy to set up and has more capital, that can be brought into the business. Partners bring new skills and ideas and also share responsibilities and duties of the business.