what are the merits of partnership?
any four.
Answers
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✯The following points describe the advantages of a partnership firm.
(1) Rue of formation and closure: A partnership firm can be formed easily by putting an agreement between the prospective partners into place whereby they agree to carryout the business of the firm and share risks. There is no compulsion with respect to registration of the firm. Closure of the firm too is an easy task. (ii) Balanced decision making: The partners can oversee different functions according to their areas of expertise. Because an individual is not forced to handle different activities, this not only reduces the burden of work but also leads to fewer errors in ' judgements. As a consequence. decisions are likely to be more balanced.
(iii) More funds: In a partnership. the capital is contributed by a number of partners. This makes it possible to raise larger amount of funds as compared to a sole proprietor and undertake additional operations when needed.
(iv) Sharing of risks: The risks involved in running a partnership firm are shared by all the partners. This reduces the anxiety. burden and stress on individual partners.
(v) Secrecy: A partnership firm is not legally required to publish its accounts and submit its reports. Hence it is able to maintain confidentiality of information relating to its operations.
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Hello dear....
Merits of Partnership____
The partnership form of business organisation enjoys the following advantages:
1. Ease of formation:
Partnership is simple to form, inexpensive to establish and easy to operate. No legal formalities are involved and no formal documents are to be prepared. Only an agreement is required. Even the registration of the firm is not compulsory. Similarly, a partnership can be dissolved easily at any time.
2. Larger financial resources:
It is possible to collect a large amount of capital due to a number of partners. New partners can be admitted to raise further capital whenever necessary. Credit-worthiness is also high because every partner is jointly and severally liable for all the debts of the firm.
3. Combined abilities and judgement:
The skill and experience of all the partners are pooled together. Combined judgement of several persons helps reduce errors of judgement.
The partners may be assigned duties according to their talent. Therefore, benefits of specialisation are available. Partners meet frequently and can take prompt decisions.
4. Direct motivation:
Ownership and management of business are vested in the same persons. There is direct relationship between effort and reward. Every partner is motivated to work hard and to ensure the success of the firm.