unit 1 Types of ownerships- partnerships

Question 1

what is a partnership

Answer 1

Partnerships are businesses owned by two or more people.

Question 2

what is a deed of partnership

Answer 2

. A contract called a deed of partnership is normally drawn up. This states the type of partnership it is, how much capital each party has contributed, and how profits and losses will be shared

Question 3

examples of partnerships

Answer 3

Doctors, dentists and solicitors are typical examples of professionals who may go into partnership together.

Question 4

what do they have that sole traders also have aswell

Answer 4

They can benefit from shared expertise, but like the sole trader, have unlimited liability.

Question 5

what is a sleeping partner

Answer 5

A partnership can also have a sleeping partner who invests in the business but does not have dealings in the day to day running of the enterprise.

Question 6

what is the main advantage of a partnership

Answer 6

The main advantage of a partnership over a sole trader is shared responsibility.

Question 7

what is specialization advantage

Answer 7

This allows for specialization, where one partner’s strengths can complement another’s. For example, if a hairdresser were in partnership with someone with a business background, one could concentrate on providing the salon service, and the other on handling the finances.

Question 8

is more capital being contributed advantage

Answer 8

More people are also contributing capital, which allows for more flexibility in running the business.

Question 9

is pressure being reduce advantage

Answer 9

Yes. There is less time pressure on individual partners.

Question 10

what can be consulted with someone else advantage

Answer 10

There is someone to consult over business decisions

Question 11

disadvantage where do most of the problems come from being in a partnership

Answer 11

The main disadvantage of a partnership comes from shared responsibility.
.

Question 12

disadvantage what can arise from being in a partnership?

Answer 12

Disputes can arise over decisions that have to be made, or about the effort one partner is putting into the firm compared with another.

Question 13

disadvantage what can be a problem and how can it be solved

Answer 13

The distribution of profits can cause problems. The deed of partnership sets out who should get what, but if one partner feels another is not doing enough, there can be dissatisfaction.

Question 14

disadvantage what do they have that sole traders also have as well

Answer 14

A partnership, like a sole trader, has unlimited liability