Partnership

Question 1

What is Partnership

Answer 1

Partnership is business owned and operated by two to twenty people.

Question 2

What are the features of partnership

Answer 2

• A private business
• Partners have unlimited liability
• Partners share/profit/losses based on their agreement
• Owned by two to twenty people

Question 3

What are the types of partners

Answer 3

Active partner
Dormant partner
Nominal partner

Question 4

What is an Active partner

Answer 4

They take full part in business

Question 5

What is an Inactive partner

Answer 5

They contribute to the capital but don’t take part in the business.

Question 6

What is a Nominal partner

Answer 6

They don’t contribute or run the business but only allow their name to be used as partners.

Question 7

Advantages of partnership

Answer 7

• They are easier to establish
• There is more capital for doing business
• The burden of work is reduced
• The risk and losses are shared among the partners
• A partners exit may not affect the business

Question 8

What are the disadvantages of Partnership

Answer 8

• The partners don’t enjoy limited liability (If the business fails, they will personally pay)
• The death of one or more partners may end the business
• The inefficiency of one partner can affect the other partners
• Decision making is slower than in a Sole proprietorship.
• Disagreement among the partners may affect the smooth running of the business.

Question 9

What is partnership

Answer 9

Partnership is business owned and operated by two to twenty people.

Question 10

Features of partnership

Answer 10

• A private business
• Partners have unlimited liability
• Partners share/profit/loss based on their agreement
• Owned by two to twenty people.

Question 11

What are the types of partners

Answer 11

• Active partner
• (Dormant) Inactive partner
• Nominal partner

Question 12

What is an Active partner

Answer 12

They take full part in the business

Question 13

What is an Inactive partner

Answer 13

They don’t contribute to the capital but don’t take part in the business.

Question 14

What is an Nominal partner

Answer 14

they don’t contribute or run the business but only allow their names to be used as partners.

Question 15

What are the advantages of partnership

Answer 15

• They are easier to establish
• There is more capital for doing business
• The burden of work is reduced
• The risk and losses are shared among the partners
• A partner’s exit may not affect the business.