Question

Write short answers for the following:
What is partnership firm? Explain features.

Answer 1

A partnership firm is the relation between two to more persons who have agreed to share the profits carried on by all and bear the losses by all.

Features of a partnership firm are :-

1. Formation : A partnership firm comes into existence through a legal agreement wherein the terms and conditions governing the relationship among the partners, sharing of profits and losses and the manner of conducting the business are specified.

2. Liability : Partners are jointly and individually liable for payment of debts, Jointly, all the partners are responsible for the debts and they contribute in proportion to their share in business and as such are liable to that extent.

3. Decision making and control : The partners share amongst themselves the responsibility of decision making and control of day to day activities.

4. Membership: The minimum number of members needed to start a partnership firm is two, while the maximum number, in case of banking industry is ten and in case of other businesses it is twenty.