Question

“Partnership is an extension of sole proprietorship”. Evaluate this statement.

Answer 1

1. Two or more persons run a firm as a partnership, sharing resources and talents. In a sole proprietorship, there is one owner.
2. This extension helps overcome the drawbacks of sole proprietorship, such as limited capital and managerial capacity.
3. However, both share features like unlimited liability and depend on the trust among owners.
4. Hence, a partnership builds on the concept of sole proprietorship to allow shared ownership and operation of a business.