Question

Write short note on the following.
Features of partnership firm.

Answer 1

Features of a partnership firm:
i. Risk bearing: The risk associated with the fluctuations in the firm’s profits is borne jointly by the partners.
ii. Decision making and control: In a partnership firm, decisions are jointly taken by the partners. Also, the operations are controlled jointly by the partners.
iii. Unlimited liability: In a partnership firm, all the partners have unlimited liability. That is, all the partners are liable for the debts of the firm to an unlimited extent.
iv. Agreement: A partnership requires an agreement (either oral or written) between two or more partners.
v. Number of members: In a partnership firm, the minimum and maximum numbers of members are 2 and 20, respectively. However, for a banking business, the maximum number of members is 10.
vi. Continuity: According to the Partnership Act, the death, lunacy, insolvency or insanity of any of the partners ends the partnership.

Answer 2

The following are the five features of a partnership firm:
i. Easy formation: A partnership firm requires an agreement (oral or written) among the members on the share of profits and losses.
ii. Unlimited liability: In a partnership, all partners have unlimited liability. That is, all partners are liable for the debts of the firm to an unlimited extent.
iii. Risk bearing: The risk associated with the fluctuations in the firm’s profits is borne jointly by the partners. This reduces the burden on each partner.
iv. Sharing of decision making and control: In a partnership firm, the decision making and control are jointly shared by the partners.
v. Number of members: In a partnership business, the minimum number of members is 2 and the maximum number of members is 20. However, for a banking business, the maximum number of members is 10.