"Partnership overcome the shortcomings of sole proprietorship". Justify this statement for or against and give a reason.

For the statement.

Yes, partnership overcomes the shortcomings of sole proprietorship. The reasons are as follows:

1. Larger Financial Resources — Sole proprietorship suffers from limited financial resources as one person cannot provide huge capital. Partnership overcomes this by pooling the financial resources of two or more partners.

2. Combined Abilities and Judgement — Sole proprietorship is limited by the abilities of a single person. In partnership, the skill and experience of all the partners are pooled together. Combined judgement of several persons helps reduce the chances of errors and leads to balanced decisions.

3. Greater Continuity — In sole proprietorship, the life of business depends on the life of the proprietor. Partnership offers greater continuity due to two or more partners.

4. Sharing of Risk — A sole proprietor alone bears all the risks of business. In partnership, risks are shared among partners.

5. Scope for Expansion — Sole proprietorship has limited scope for expansion. In partnership, more partners can be taken in to meet the financial and managerial requirements of growing business.

Hence, the statement is justified — partnership form of business organisation was evolved to overcome the shortcomings of sole proprietorship.