(b) State any two characteristics of partnership which overcome the inherent limitations of sole proprietorship form of business organisation.

Question

Accepted Answer

a) More capital: The capital contributed by the partners can be comparatively more than the capital invested by a sole proprietor.
b) Increased managerial ability: 'Two heads are better than one'. Decision making in a partnership is balanced as the partners generally discuss amongst themselves before they arrive at a decision.
c) Continuity: Death, retirement, insolvency of one partner may not impact the continuity of the firm if the remaining partners decide on continuing with the firm.
d) Sharing of loss: When there are partners, the loss amongst all may be shared.