Define Partnership Firm and explain its features
A partnership firm is a form of organisation wherein two or more persons work together, pool funds and share the profits earned (or bear the losses incurred).
The following are 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 shared by the partners.
v. Agreement: A partnership requires an agreement (oral or written) between two or more partners.