Write short notes on the following. Features of partnership firm.

ANSWER:

Features of a partnership firm:

i. Risk bearing: The risk associated with the fluctuations in the firm’s profits is borne jointly by the partners.

ii. Decision making and control: In a partnership firm, decisions are jointly taken by the partners. Also, the operations are controlled jointly by the partners.

iii. Unlimited liability: In a partnership firm, all the partners have unlimited liability. That is, all the partners are liable for the debts of the firm to an unlimited extent.

iv. Agreement: A partnership requires an agreement (either oral or written) between two or more partners.

v. Number of members: In a partnership firm, the minimum and maximum numbers of members are 2 and 20, respectively. However, for a banking business, the maximum number of members is 10.

vi. Continuity: According to the Partnership Act, the death, lunacy, insolvency or insanity of any of the partners ends the partnership.