Partnership firm is form of business where two or more individuals through mutual consent form a partnership to carry out business activities. To determine : Brief note for the characteristics of partnership. Brief note for the characteristics of partnership: Characteristics Application to General Partnerships 1. Life In term of Partnership, life means the life of partnership firm i.e. term for which partnership firm has been formed. A partnership firm can be opened for a particular period of term and the same is mentioned in partnership deed and once that term is expired, partnership firm gets devolved. 2. Owners' liability Here owners' liability means partners in the partnership firm can have limited or unlimited personal liability depending on type of partnership firm and terms of partnership deed. 3. Legal Status A partnership firm can be formed either through formal agreement or oral agreement. It can be registered under law or can be run without any registration. A partnership firm obtains a legal status when it is registered under the law of the country. 4. Tax status of income Income of partnership firm is taxable under the relevant law. 5. Owners' authority Owners' authority means the decision making capacities of each partner in the partnership firm. It could be defined through agreement. Further, decisions can be taken through mutual consent. 6. Ease of formation Ease of formation means partnership firm is easy to form as compared to forming a Company. Partnership firm can be started through two or more people and agreement can be oral as well as written. 7. Transferability of ownership Transferability of ownership means an existing partner can transfer its profit sharing or ownership to existing partners as well as new partners. 8. Ability to raise large amounts of capital Partnership firms can low ability to raise large amounts of capital as compared to Company and more ability as compared to sole ownership.

FINANCIAL ACCT-CONNECT

8th Edition

ISBN: 9781266627903

Author: Wild

Publisher: INTER MCG

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Chapter D, Problem 8QS

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Solution Summary: The author explains the characteristics of a partnership firm, stating that it can be formed through formal agreement or oral agreement.

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