Answered: What are the main distinctions between…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

What are the main distinctions between an ordinary partnership and a private limited company?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Expert Solution

Introduction

Company- In order to take part in and run a business operation in an industrial or commercial capacity, a collection of people can create a legal organization known as a company. Broadly speaking, a firm is set up to make revenue from its operations. Due to the fact that they provide jobs and draw in discretionary income to encourage economic growth, businesses are essential to the well-being of a country's economy. Although some might be set up as nonprofit charities, most businesses are primarily designed to generate revenue from their operations.