Commercial Applications
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.
Answer
Partnership business suffers from instability.
Reason — Partnership business suffers from instability (uncertain life) because insolvency, insanity, retirement or death of any partner may cause an abrupt end to the business. The other options are incorrect — partnerships have more funds than sole proprietorship, are easy to form, and secrets are known to all partners.
Related Questions
Which of the following is NOT a merit of partnership?
- Ease of formation
- Scope for expansion
- Uncertain life
- Combined abilities and judgement
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.
Statement I: Registration of partnership firms is compulsory under the Partnership Act 1932.
Statement II: The registration of a firm is a difficult process.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are incorrect
Which of the following is not a consequence of non-registration?
- An unregistered partnership firm cannot enforce its claims against a third party in a court of law.
- It can sue any of its partners.
- Partners of an unregistered firm cannot sue the firm to enforce their claims.
- Partners of an unregistered firm cannot file a suit against each other.