Give a thorough comparison about the benefits and drawbacks of these two business vehicles
Give a thorough comparison about the benefits and drawbacks of these two business vehicles
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Give a thorough comparison about the benefits and drawbacks of these two business vehicles
-Company
-Partership
Expert Solution
Step 1
Company:
It is a form of business separately created by law as an association of persons who invest money for a common stock.
Partnership:
It is a form of business where a minimum of two persons come together to form a business and share profits and losses in a fixed proportion.
Step 2
Merits
Company:
- The liability of a company is limited in nature unless otherwise stated
- There exists a high chance for diffusion of risk for a company when compared with a partnership.
Partnership:
- A partnership business is relatively easy to set up and the operational costs are low.
- Availability of capital is relatively more in company.
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