Question:
Explain meaning, features, merits and demerits of partnership firm.
Answer:
Partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses. The partnership was evolved to overcome the shortcomings of sole proprietorship and Joint Hindu Family business.
Features:
- Two or more persons: There must be at least two persons to form a partnership. The maximum number of persons is 10 in banking business and 20 in non-banking business.
- Agreement: It is an outcome of an agreement among partners which may be oral or in writing.
- Lawful business: It can be formed only for the purpose of carrying on some lawful business.
- Decision making and control: Every partner has a right to participate in management and decision making of the organization.
- Unlimited liability: Partners have unlimited liability.
- Mutual agency: Every partner is an implied agent of the other partners and of the firm. Every partner is liable for acts performed by other partners on behalf of the firm.
- Lack of continuity: Firms existence is affected by the death, lunacy and insolvency of any of its partner. It suffers from lack of continuity.
Merits:
- Ease of formation and closure: It can be easily formed. Only an agreement among the partners is required.
- Larger financial resources: There are more funds as capital is contributed by number of partners.
- Balanced decisions: As decisions are taken jointly by partners after consulting each other.
- Sharing of risks: In it, risk gets distributed among partners which reduces anxiety, burden and stress on individual partner.
- Secrecy: Secrecy can be easily maintained about business affairs as they are not required to publish their accounts or to file any report to the government.
Limitations:
- Limited resources: There is a restriction on the number of partners and hence capital contributed by them is also limited.
- Unlimited liability: The liability of partners is unlimited and they are liable individually as well as jointly. It may prove to be a big drawback for those partners who have greater personal wealth. They will have to repay the entire debt in case the other partners are unable to do so.
- Lack of continuity: Partnership comes to an end with the death, retirement, insolvency or lunacy of any of its partners.
- Lack of public confidence: Partnership firms are not required to publish their reports and accounts. Thus they lack public confidence.
Forms of Business Organisation
Q 1.
X is interested in the floatation of a company. Briefly discuss the steps he should take.
Q 2.
What is the role of Karta in Joint Hindu Family business?
Q 3.
Compare the status of a minor in a Joint Hindu Family Business with that in a partnership firm.
Q 4.
What is meant by ˜partner by estoppel'? Explain.
Q 5.
Define promoter. What are the functions of a promoter?
Q 6.
Explain meaning, features, merits and demerits of Sole Proprietorship.
Q 7.
Explain different types of partners.
Q 8.
Explain procedure of registering a partnership firm.
Q 9.
Explain procedure of registering a partnership firm.
Q 10.
Explain meaning, features, merits and demerits of partnership firm.
Q 11.
What are the steps required for raising funds from public?
Q 12.
What do you mean by incorporation of a company? What are the steps involved in corporation of a company?
Q 13.
Explain meaning, features, merits and demerits of joint stock company.
Q 14.
State the important privileges available to a private company.
Q 15.
Discuss the characteristics, merits and limitations of the cooperative form of organization. Also describe briefly different types of cooperative societies.
Q 16.
For which of the following types of business do you think a partnership firm of organization would be more suitable, and why?
(i) Grocery store (ii) Medical store
(iii) Legal consultancy (iv) Craft centre
(v) Internet cafe (vi) Chartered accountancy firm
Q 17.
Define Articles of Association. What are its contents?
Q 18.
Explain the contents of Memorandum of Association.
Q 19.
Is registration of partnership firm compulsory? What are the consequences of non-registration?
Q 20.
Distinguish between a Joint Hindu family business and partnership.
Q 21.
What do you understand by a.sole proprietorship firm? Explain its merits and limitations.
Q 22.
Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization. Why?
Q 23.
Distinguish between a Joint Hindu family business and partnership.
Q 24.
Explain the concept of mutual agency in partnership with suitable example.
Q 25.
For which of the following types of business do you think a sole proprietorship firm of organization would be more suitable, and why?
(i) Grocery store (ii) Medical store
(iii) Legal consultancy (iv) Craft centre
(v) Internet cafe (vi) Chartered accountancy firm
Q 26.
Explain the meaning, features, merits and demerits of cooperative society.
Q 27.
Explain different types of partners.
Q 28.
Explain the following terms in brief:
(i) Perpetual succession (ii) Common seal
(iii) Karta (iv) Artificial person
Q 29.
If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.
Q 30.
How does a cooperative society exemplify democracy and secularism? Explain.
Q 31.
Why is partnership considered by some to be a relatively unpopular form of business ownership? Explain the merits and limitations of partnership.
Q 32.
Differentiate between:
- Memorandum of Association and Articles of Association.
- Private and Public Company
