Concept Introduction:
Characteristics of partnership: A General partnership has the following characteristics:
• Duration of Life: A General partnership has a limited life.
• Owner's Liability: The partner’s liability is unlimited in case of a partnership.
• Legal Status: A partnership is not considered as a separate legal entity.
• Tax Status of Income: In case of partnership firm, the income earned by the partnership is taxed in the hand of partner’s.
• Owner's authority and authorization: A partnership works on the concept of Mutual Agency. As per Mutual agency concept, each partner is principal as well as the agent of another partner; they work for the benefit of partnership firm together.
• Ease of formation: A partnership firm is very easy to form business organization; it requires only a partnership contract to form a partnership.
• Transfer of ownership: Transfer of owner is difficult in case of change of partners in a partnership.
Ability to raise the large capital amount: A partnership firm cannot raise a large capital amount as it has a limited number of partner’s and it does not have access to the public funds.
To determine: The correct matches for each characteristic of the general partnership
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Chapter 12 Solutions
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