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Question

Write short answer of the following.

State any five features of partnership firm.

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Solution

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.


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