PARTNERSHIP AND ITS FEATURES

MAY 2, 2020

DAY 5

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LEARNING OUTCOMES- At the end of the lesson, students will be able to-

1) Explain the meaning of partnership.

2) Enumerate the features of partnership.

WATCH A SMALL VIDEO TO START WITH THIS TOPIC.

NOW TAKE DOWN THE NOTES:

Q.8 What is meant by Partnership? (1).

Ans- It is an association of two or more individuals who agree to pursue business activity for a common objective.According to Indian Partnership Act ,1932 define partnership as "the relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all."

Q.9 Explain the features or characteristics of partnership. (6)
Ans- 1. Liability-
a) The partners of a firm have unlimited liability .All the partners are jointly and  individually liable for all the payment of business liabilities.
b) Jointly each partner contributes towards the business liabilities in proportion to their share in business and  individually also sometimes they have to pay for business liabilities from their personal assets.
2. Risk Bearing-
a) Partners work as a team and share profits or losses in a  predetermined ratio.
b) If it is not predetermined then profits and losses are shared equally  and this reduces the risk of an individual.
3. Decision making and control -
a)Partners with mutual consent take all the decisions related to the running of the business.All the partners share the responsibility of decision making and control of day to day business activities.
b)The business is managed with the efforts of all the partners making control effective and efficient.
4. Continuity -
a)Continuity of partnership business depends upon the terms agreed upon amongst the partners at the time of its formation.
b) Death, retirement, insolvency or insanity of any partner brings up an end to the partnership business. However, if remaining partners wish they may continue the business after setting the claim of the outgoing partner under a new agreement.
5. Number of partners-
a)  Partnership business can be started with minimum two people and maximum 100 people.
b) The Indian Participation Act, 1932 governs partnership business through an agreement, written or oral.
6. Mutual Agency-
a) Agency relationship means each partner is the owner as well as agent of the firm and agent to the other partners. The business responsibilities in partnership are either shared by all or undertaken by one of them on behalf of all .
b) A partner is an agent when he represents other partners and binds the other partners through his acts and he is a principal  when he is bound by the acts of other partners. That is why every partner is a principal as well as an agent.
7.Non transferability of shares-
a) No partner can sell or  transfer his share to any partner or outsider without the consent of all the partners.
b) A partner can retire from business only after giving due notice to the other partners.
(Write any 6 points for 6 marks).


    GOD BLESS YOU ALL!