Explain any four merits and four demerits of Partnership form of busin

1.	Explain any four merits and four demerits of Partnership form of business.
Answer» Merits : (a) Ease of formation and closure : There is no compulsion for registration of the firm. (b) Balanced decision making : Partners can oversee different areas according to their area of expertise. (c) More funds : As the capital is contributed by a number of partners. (d) Sharing of risks : Risks of losses is shared by all the partners, reducing the burden on individual partner. Demerits : (a) Unlimited liability : Partners' personal resources can be used to repay business debt. (b) Limited resources : As there is restriction on numbers of partners so less capital contribution. (c) Possibility of conflicts : Difference in opinion of partners on same issues may lead to disputes between them. (d) Lack of continuity of business : Death, lunacy, insolvency of any partner may bring an end to the business.

Explain any four merits and four demerits of Partnership form of business.

Answer»

Merits :

(a) Ease of formation and closure : There is no compulsion for registration of the firm.

(b) Balanced decision making : Partners can oversee different areas according to their area of expertise.

(c) More funds : As the capital is contributed by a number of partners.

(d) Sharing of risks : Risks of losses is shared by all the partners, reducing the burden on individual partner.

Demerits :

(a) Unlimited liability : Partners' personal resources can be used to repay business debt.

(b) Limited resources : As there is restriction on numbers of partners so less capital contribution.

(c) Possibility of conflicts : Difference in opinion of partners on same issues may lead to disputes between them.

(d) Lack of continuity of business : Death, lunacy, insolvency of any partner may bring an end to the business.

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