Advanced Accounting
12th Edition
ISBN: 9781305084858
Author: Paul M. Fischer, William J. Tayler, Rita H. Cheng
Publisher: Cengage Learning
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Question
Chapter 13, Problem 1UTI
To determine
Concept Introduction:
People start their own business and select the form of organisation depend upon their need and kind of their business. Over the other form of organisation,
To Explain:
The major characteristics of a partnership firm that might influence the people decision.
Expert Solution & Answer
Answer to Problem 1UTI
People choose the partnership form of organization as it has distinct advantages.
Explanation of Solution
The characteristics of partnership form of organization are as follows:
- The process for formation of partnership firm is simple and convenient.
- Partnership is an association between the persons who has a good faith with each other and has a good knowledge of conducting business and have a common objective of achieving a financial goal.
- All the partners of the partnership firm are the joint owner of the business property.
- One partner act will bind the other partners and partnership firm also, even in any wrongful act.
- The partners are jointly and severally liable for the partnership firm if partnership deed is made of general liability. And if partnership deed is made of limited liability than each partners liability is limited to the extend of his investment only.
- Currently, Limited Liability Partnership (LLP) form of partnership has developed, in this partners liability is limited yet they can participate in the management. In LLP, any obligation created by one partner cannot be recovered from the other partners.
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Students have asked these similar questions
A significant difficulty that entrepreneurs encounter is determining the kind of organization to create. What are some significant aspects of a partnership that might sway their decision?
What are some of the legal risks associated with organizing a business as a partnership? In your opinion, would you want to enter into a partnership? Under what circumstances? Explain.
What choices are available to a group of persons creating a business? Why is it possible that a partnership is not the optimal company structure? What additional possibilities do they have?
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