Question

Answer the following questions:
Mention any four demerits of partnerships firms.

Answer 1

Partnership firms are the firms which are carried on by two or more people who mutually come to an agreement either verbal or written to carry out a business by contributing appropriate capital and share profits in a prescribed ratio.

The demerits of a partnership firm are:

1. Share in equity.

2. Mutual distrust between the partners.

3. No separate legal entity.

4. Difference of opinions between the partners.