Commercial Applications
Which of the following is NOT a merit of partnership?
- Ease of formation
- Scope for expansion
- Uncertain life
- Combined abilities and judgement
Partnership
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Answer
Uncertain life
Reason — Uncertain life is a demerit, not a merit, of partnership. Partnership business suffers from instability because insolvency, insanity, retirement or death of any partner may cause an abrupt end to the business. Ease of formation, scope for expansion, and combined abilities and judgement are all merits of partnership.
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Related Questions
Which of the following statement is incorrect?
- Each partner is liable to an unlimited extent for the firm's obligations towards outsiders.
- A partnership can be formed only for the purpose of carrying on a business.
- Each partner is liable for acts performed by other partners on behalf of the firm.
- An association of persons who jointly own a house without carrying on a business can be considered as partnership.
Which of the following statements regarding partnership is incorrect?
- Secrets are known to partners.
- Coordination between partners is not required.
- Ownership is shared by partners.
- Agreement is essential.
Assertion (A): A partnership can only be formed for a lawful business.
Reasoning (R): Illegal activities like smuggling or theft can be considered as a partnership if profits are shared.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.
Which of the following statements regarding partnership is correct?
- Less amount of funds are available
- They are difficult to form.
- Partnership business suffers from instability.
- Secrets are not known to all members.