Question

1. List two different types of partnerships and describe each in detail.

Answer 1

Partnership :

A Partnership arises whenever two or more people co-own a business and share in profits and losses of the business. In a partnership, each person contributes something to the business - Such as ideas, money,property or some combination of these. Management rights, profit share, and personal liability will vary depending on which of the modern partnership forms of business. The different types of partnerships are :

1. General Partnership

2. Limited Partnership

General Partnership

A general partnership involves two or more owners carrying out a business purpose. General partners share equal rights and responsibilities in connection with management of the business and any single partner can bind the entire group to a legal obligation. Each individual partner assumes full responsibility for all the business debts and obligations.

Limited Partnership

An Limited Partnership allows each partner to restrict his or her personal liability to the amount of his or her business investment. but not every partner can benefit from this limitation i.e, at least one partner of partnership must accept general partnership status, exposing himself or herself to a full personal liability for the business debts and obligations.